Small businesses continue to struggle post pandemic: report

A man walks past office lease signs during the COVID-19 pandemic in downtown Hamilton, Ont., on Thursday, March 18, 2021. THE CANADIAN PRESS/Nathan Denette

Small business insolvency numbers continue to rise in Canada post-pandemic, but a recent report shows that current bankruptcy statistics aren't telling the whole story when it comes to small business closures in our country.

The report, released last month by the Canadian Federation of Independent Business (CFIB), says that given the choice, nearly half of small businesses would not file for bankruptcy. Some 46 per cent of those surveyed said they would simply close their doors and go out of business. Only 7 per cent said they would actually file for bankruptcy.

Kathleen Cook, director of provincial affairs for the CFIB in Manitoba says the results make sense.

"Bankruptcy can be a little more devastating financially for anyone, and it is a lot more work," she said, "so if it's possible to simply liquidate your assets and sell your business, or close it down, that’s probably the option you would choose as a business owner."

The report says that small businesses in Canada continue to struggle, even as health restrictions are lifted and the pandemic ends. Insolvency numbers were highest in the construction, accommodation, and food services industries.

Cook says there a number of different factors at play, debt being one of them, "Many small businesses took on significant debt during the pandemic just to keep their doors open, and now those bills are coming due."

As well, she says high interest rates, inflation, and labour shortages are all making it a very challenging time to run a small business.

She says locally, our numbers aren't as bad as the rest of the country. "In Manitoba, insolvencies have actually been fairly stable," said Cook.

But Cook says the CFIB would like to see the government track insolvency numbers better. Currently only actual bankruptcies are recorded, with the rest of the closures going undocumented.

"What we're giving them here is data that says these are the number of businesses that could close," said Cook, "here's the risk, and here's what you can do to help them."