The Canadian Federation of Independent Business is warning that more than 220,000 businesses across the country are at risk of permanently closing due to the COVID-19 pandemic.
The CFIB, a lobby group that represents small and medium-sized businesses (SMBs) in Canada, released a new report on Thursday that surveyed 4,129 members about business prospects through the pandemic. The survey found that 181,000 businesses – or one in six – are seriously contemplating permanently closing. That’s up from a similar survey conducted in July, which found that 158,000 businesses were at risk of closing.
Under a worst-case scenario, the CFIB estimates that as many as 220,000 businesses could shutter because of the COVID-19 pandemic, the equivalent of one in four SMBs across Canada.
“The small business economy is on life support right now,” Laura Jones, CFIB’s executive vice president, said in an interview.
“Those businesses need to get back to making sales for their survival.”
The latest statistics are in addition to the 58,000 businesses that became “inactive” in 2020.
Businesses across the country have continued to struggle as the pandemic rages on and many governments impose lockdowns and restrictions in an attempt to stem the spread of COVID-19. The CFIB said businesses in the hospitality, arts and recreation sectors are at the most risk of closing, particularly in provinces like Ontario and Quebec where many businesses face strict lockdown rules.
The low end of the CFIB’s forecast estimates that 71,000 SMBs may close, which is still equivalent to one in eight. Jones said how many companies end up closing will depend on government support programs, as well as a return to normal operations and consumer behaviour. She noted that a recent CFIB survey found that most businesses have managed to survive the pandemic thanks to government support.
“A very sobering number is that 70 per cent of business owners agree that their business survival right now is dependent on support programs such as the wage and rent subsidies,” she said.
“It just shows how far we have to go to get the economy going... those businesses need to depend on sales for survival, not subsidies.”
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.