As the COVID-19 pandemic drags on, Canadian small businesses have racked up a collective $135 billion in debt because of the health emergency, according to estimates by the Canadian Federation of Independent Business (CFIB).
The group, which lobbies for small entrepreneurs, says seven in 10 small business owners have had to borrow funds due to the pandemic, with the average debt load now nearly $170,000.
While many ventures experienced some reprieve during the summer, with sales picking up during the warmer months, Canada’s small business debt has since seen “a significant increase” since the CFIB’s previous estimate of $117 billion in July 2020.
And while just over half of businesses are now fully open, only 25 percent report normal sales levels, a trend the report calls “concerning.”
Small businesses in the hospitality, arts and recreation and social services sectors have been more likely to have taken on debt, as companies in these industries are usually public-facing, have a limited ability to accommodate for remote work and are unlikely to be considered essential to the CFIB report notes.
Overall, just over three-quarters of small businesses that have taken on debt expect it will take them over a year to repay it, with 11 percent of this group saying they’re concerned that may not be able to repay at all.
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