Small businesses in Canada have taken on $117 billion in debt as a result of the COVID-19 pandemic, reports the Canadian Federation of Independent Business on Wednesday.
The CFIB said three quarters of small businesses have taken on debt as a result of COVID-19 and a majority of those with debt (68 per cent) estimate it will take more than a year to pay off.
Also, the number of businesses that are fully open is 58 per cent, the number that are back to full staffing is 35 per cent, and the number that are back to normal revenues is 24 per cent.
“Government debt has ballooned and so too has the private debt taken on by small businesses to deal with COVID-19,” said Laura Jones, Executive Vice-President at CFIB, in a news release. “I’ve talked to many businesses that are open again, but are worried about being able to outrun the debt they have accumulated, particularly with sales still down. Recovery is going to be a slow slog and both governments’ and customers’ support is critical to make it happen.”
The small businesses that have incurred debt because of the pandemic report they have taken on $135,000 on average, added the CFIB.
“To finance COVID-19 revenue shortfalls and extra costs businesses are relying on personal savings (37 per cent), credit cards (34 per cent), bank loans (18 per cent), retirement savings (11 per cent), mortgages (9 per cent) and loans from families and friends (9 per cent), said the organization.
CFIB said it recently launched #SmallBusinessEveryDay to promote Canadian initiatives that support local businesses and emphasize how important customers are to their recovery.
“Feeling customer support is a bright spot for business owners who are financially and emotionally stressed. The more we can do to support local, the faster we can all recover from the economic meltdown that came with COVID-19. Let’s make it a small business summer and think #SmallBusinessEveryDay so small businesses have a tomorrow,” said Jones.