1 in 4 Canadian businesses could collapse from big income drop

Canadian Federation of Independent Business says half of small firms are reporting weaker sales

1 in 4 Canadian businesses could collapse from big income drop
Steve Randall

The devasting impact of the virus outbreak on Canada’s small businesses has been highlighted in a new report.

It shows that half of small firms say that their sales have fallen as a result of the COVID-19 crisis and 1 in 4 believe that a big drop in income would finish them in just one month.

The Canadian Federation of Independent Business report shows that hospitality, arts/recreation, retail and personal services are most impacted with a $66,000 average cost to those affected.

Four in ten respondents said they would have zero sales if face-to-face contact becomes impossible.

"The early economic impacts of coronavirus on Canada's SMEs has been massive," stated Dan Kelly, CFIB president. "Even more alarming is our finding that a full quarter of small firms would not be able to survive for more than a month with a drop in business income of more than 50%."

Among the measures that small businesses have taken are reducing staff hours (43%) and temporary lay-offs (20%).

Almost 4 in 10 respondents said they have suffered supply chain issues.

More support needed
While the CFIB acknowledges the importance of keeping people safe, it also warns that the economic impact of self-isolation must be effectively addressed by the government.

"While waiving the one-week EI waiting period and expanding the Work-Sharing program were helpful moves, CFIB is concerned with calls to mandate employers to provide 14 sick leave days at a time when they are already experiencing tremendous cost pressures and decreases in revenues," added Corinne Pohlmann, CFIB's senior vice-president of national affairs. "Governments need to step in and offer direct cash support to employees and the self-employed who are forced to self-isolate, as has happened in the UK, Ireland, Norway, Sweden and Denmark."

What small firms want
Survey respondents have several measures that they would like to see the government implement:

  • Provide temporary tax relief on income, payroll and sales taxes (69%)
  • Cancel planned tax increases such as CPP/QPP and carbon tax (66%)
  • Delay tax filing deadlines and eliminate penalties for late payments and remittance (65%)
  • Introduce wage subsidies for businesses to retain staff (58%)
  • Create incentives to boost consumer spending (46%).

"We trust that governments are doing everything they can to ensure Canadians are safe," concluded Kelly. "But we must also ensure the economic survival of our small and medium-sized businesses to ensure we can get back to normal as soon as the threat is over."