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Rising costs threaten small business recovery, CFIB says

Dan Kelly
Dan Kelly

Canadian small businesses are at greater risk of going under than federal bankruptcy data suggests, as rising operates costs complicate their efforts to recoup losses from the pandemic, a business lobby group said Thursday. 

Inflation and labour shortages are just some of the factors sapping businesses’ ability to get back to normal, according to the Canadian Federation of Independent Business, which release a report on the recovery. In an interview, CFIB president Dan Kelly said the burden will grow further by the end of the year, as business owners will see another increase in Canada Pension Plan and employment insurance payments 

“Many business owners are saying they just can’t hang on anymore,” Kelly said, noting that even businesses that have gone back to normal levels of sales may still be unprofitable because costs are so much higher than what they were in the past. 


In its report Thursday, CFIB said more than half of business owners they surveyed are yet to return to “normal” pre-pandemic revenue levels, while nearly two out of three are still carrying pandemic debt. It said only 10 per cent have been able to pay debt back in full. 

Many business owners are saying they just can't hang on anymore

Dan Kelly

He said a number of businesses stayed around during the pandemic thinking they would be able to live and fight another day but they’re quickly realizing that may not be possible.  

“We’ve seen increases on almost every line of a business’s budget and that’s really taking their ability to earn a profit,” he said. 

The group noted a lot of businesses are now running out of money they borrowed during the pandemic, including Canada Emergency Business Account (CEBA) loans. It also said more than one in six Canadian small business owners say they are considering going out of business. 

The main focus of the study though, is how unreliable official bankruptcy data can be when looking at the state of Canadian small businesses. 

Data from the Office of the Superintendent of Bankruptcy Canada show insolvencies have been on an upward trend since May 2021, with insolvencies peaking in March 2022. But in its report, CFIB said this data does not reflect other types of business closures. 

“Our research provides a broader perspective on business insolvencies in Canada and shows that the rising number of small business bankruptcies is just the tip of the iceberg,” CFIB chief economist Simon Gaudreault said. 

CFIB said its survey data show that only 10 per cent of small business owners would file for bankruptcy if they were unable to keep their doors open. Meanwhile, 46 per cent of businesses at risk of closure would simply stop operating rather than go through the bankruptcy process. 

“One of the important pieces here is we don’t look just to business bankruptcies as the only measure of business failures or success,” Kelly said. “It’s only telling part of the story.” 

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