(Toronto) Business bankruptcies are on the rise in Canada and more and more small businesses are at risk of closing, according to a group of small and medium-sized enterprises (SMEs).
Posted at 11:26
Statistics Canada data shows that small business insolvencies have been on the rise since May 2021.
In a report released Thursday, survey data from the Canadian Federation of Independent Business (CFIB) indicates that only 10% of small business owners in Canada would go bankrupt if their business were no longer solvent.
In fact, 46% of business owners say they would simply go out of business rather than go through the bankruptcy process.
“Official data on small business bankruptcies in the country do not take into account zombie companies or those that would simply close their doors instead of declaring bankruptcy,” says the vice-president of research and chief economist at CFIB, Simon Gaudreault.
“Our report aims to broaden the outlook for business insolvency in the country and clearly shows that the increase in small business bankruptcies is just the tip of the iceberg,” he adds.
CFIB adds that its data shows that 54% of business owners have not returned to their pre-pandemic sales levels and 62% still have debt related to the pandemic.
More than one in six Canadian small business owners say they are currently considering going out of business, according to CFIB.
The SME group wants government support to help Canada’s small business sector get through the coming months and deal with challenges such as pandemic-related debt and supply chain issues.