More than half of small companies still unable to pay their debt as of February
The Canadian Federation of Independent Business believes the federal government should utilize the next budget to put policies in place that would help small companies and promote economic development. This includes assisting firms with debt due to COVID, reducing company costs, cutting red tape, and managing labour shortages.
"Small businesses are facing higher costs across the board, rising interest rates and lack of staff, at a time when many still haven't recovered from the impacts of the pandemic. This leaves many of them in a precarious financial position, without an ability to repay their staggering debt loads," said Corinne Pohlmann, CFIB's senior vice-president of national affairs.
Just 48% of small firms had seen their revenues rebound to pre-pandemic levels as of February, and more than half (57%) had not paid off their debt from the pandemic, which was estimated to be worth $105,000 on average.
As expenses rise across nearly every line of their budgets, small companies are also grappling. For 54% of small businesses, the expenses of taxes and regulations are a problem. Additional cost concerns include those related to fuel and energy (69%) as well as wages (63%) and insurance (59%).
According to CFIB's chief economist Simon Gaudreault, "Many small firms are slowly recovering from years of subpar business conditions. Now, they're getting hit with rapidly increasing costs. Small business confidence is still below the pre-pandemic levels, and there's a lot of uncertainty around the economy."
CFIB suggests the following to the government to help small businesses in their recovery and growth:
- Extend the Canadian Emergency Business Account (CEBA) repayment date to December 2024 or possibly 2025
- Pause carbon pricing at the present rate
- Reduce the federal small business tax rate from 9% to 8%, at least for the next two years, and raise the $500,000 small business deduction ceiling to $600,000
- Provide a tailored Employment Insurance (EI) payment for small businesses
- Reduce credit card processing costs for small businesses.
- For lower-skilled temporary foreign employees, establish a route to permanent residency
- To assist with capital investments, extend the Accelerated Capital Cost Allowance (ACCA) and permanently institute immediate expense up to $1.5 million.
"The federal budget must speak to small business priorities and put appropriate policies in place to ensure a strong small business recovery across all sectors and regions," added Dan Kelly, CFIB president.