The Canadian Chamber of Commerce released a survey that found that half of small businesses in the country could close in 2021 due to financial difficulties caused by the COVID-19 pandemic.
With 51.3 percent of companies unsure how long to keep operating with their current income and expenses, said Canadian Chamber of Commerce’s chief economist and senior vice president of policy, Dr. Trevin Stratton, “Businesses’ Ability to Cope with the Weather The pandemic is rapidly disappearing. “
Businesses of all sizes are largely feeling the economic fear.
- 52.2 percent for 1-4 employees;
- 50.9 percent for 5-19 employees;
- 49.3 percent for 20-99 employees;
- 44.2% for 100 or more employees.
Only 38.4 percent of companies assume that with current revenues they will be fully functional for 12 months or more.
Forty percent are unable to borrow more in the face of the growing stress on small businesses, and many are at their debt limit.
- 41.8 percent of companies with 1-4 and 5-19 employees cannot take on any further debt.
- 29.0 percent for 20-99 employees;
- 17.1 percent for 100 or more employees.
According to the Canadian Federation of Independent Businesses (CFIB), seven in ten small business owners have taken on total debt of $ 135.1 billion as a result of COVID-19.
The average small business owes roughly $ 170,000.
“Over the past six months, the average small business debt for COVID-19 has increased significantly,” said Laura Jones, executive vice president, CFIB.
“While many companies had previously reopened and tried to regain lost sales, the second wave and the associated constraints are causing small businesses to recover, which is already slow.”
After adjusting the data for the economy as a whole, CFIB estimates the total debt of Canadian small businesses due to COVID-19 at $ 135.1 billion as of early February. This is a significant increase from CFIB’s previous estimate of $ 117 billion in July 2020.
Of those companies that have taken on debt, three-quarters (76 percent) say it will take over a year to repay, with 11 percent of that group expressing concern that they may fail to repay their COVID-19 debt can all.
Stratton said the numbers provide the latest snapshot of the health of our business world.
“They are sending a very clear message – the light at the end of this pandemic tunnel is still a long way off for most Canadian companies,” he said.
Almost half (46.4 percent) of companies don’t know how long they can continue operating at current levels before considering layoffs.
Almost a third (29.6 percent) of the companies in the accommodation and catering sector expect staff reductions in the next three months.
“According to the GDP figures for 2020, which were released earlier this week, [the recent] CSBC data provides an initial glimpse into the challenges facing Canada’s businesses and economy in the first quarter of 2021, ”said Stratton.
These numbers suggest a compounding effect of previous bans. With each new wave, the third round of lockdowns could be the breaking point for many who are already financially few and far between, experts say.
“Looking to the future, Canada will have to find new answers to help manage the pandemic until vaccination rates rise. We cannot afford to take the same approach that we saw last year. We need a viable reopening plan that takes a holistic approach and focuses on tools like rapid testing and robust contact tracing.
“The survival of our companies depends on it.”
Four in ten companies say it will take at least a year, if not longer, to expect average profits.
Dhaliwal is Western Standard’s Edmonton reporter.