Canadian Federation of Independent Business (CFIB) poll finds nearly one in five small business owners preparing to close permanently under pressure from pandemic-related debt, sluggish revenue growth and rising costs doing.
of Recent research Among CFIB members, they found that 54% of small businesses still reported lower-than-usual earnings, and 62% had outstanding debt incurred during the pandemic.
When respondents were asked whether they agreed with the statement, “We are actively considering bankruptcy or winding down our business,” 17% gave a positive answer.
“SMEs are heading for a rough recovery, but governments can step in and help by taking concrete steps,” said CFIB President Dan Kelly. statement “Governments will have to decide whether to exacerbate the problem with higher taxes or take immediate action to prevent many businesses from disappearing entirely.”
The CFIB found that only 10% of Canadian small business owners choose to file for bankruptcy if they can’t keep their doors open, and nearly half of businesses at risk of closing. (46%) found that they would simply cease operations without going through bankruptcy proceedings. bankruptcy proceedings.
“Insolvency is a major problem for small businesses in Canada in all sectors, but it does not measure the full extent of the problem,” the CFIB said.
“Of all the methods business owners use to close their businesses due to financial hardship, bankruptcy filings are just a few.”
The Bankruptcy Administration reported last year that the number of bankruptcies in Canada fell 7% from 2020, to a total of 92,572. According to a BlackRock reporter.
“Bankruptcy is a lagging indicator,” Superintendent Elizabeth Lang said while testifying before the House Finance Committee. meeting July 7th, 2o2o. “Historical data show that if GDP falls in the face of a recession, as many have suggested, it will increase. [in insolvencies], but I don’t think it’s sudden. I don’t know if there will be a crisis, but it is very difficult to predict. ”
At the time, Lang said of the government’s readiness for a possible increase in bankruptcy filings under the COVID-19 pandemic, “Compared to Canada’s last severe recession in 2008, bankruptcy rates were very low. paying attention.
Bankruptcies following the 2008 financial crisis peaked at 158,441according to a 2016 federal report titled “Decade Trends in Bankruptcy in Canada.”
“The 2008-2009 recession hit hard,” the report said.
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Andrew Chen is a reporter for the Epoch Times based in Toronto.