More than 200,000 Canadian small businesses could shut their doors permanently due to the novel coronavirus pandemic, jeopardizing close to three million private-sector jobs in the worst-case scenario, according to a recent survey by the Canadian Federation of Independent Business (CFIB).
The organization estimates 181,000 small entrepreneurs are seriously considering closing down their businesses after a spike in case counts prompted a new wave of government lockdowns and restrictions.
The figure is based on responses from the CFIB’s latest survey of its members, which was conducted between Jan. 12 and 16, and comes on top of Statistics Canada data showing the country lost nearly 58,000 active businesses in 2020.
“The more businesses that disappear, the more jobs we will lose and the harder it will be for the economy to recover,” said Simon Gaudreault, CFIB’s senior director of national research.
How the coming months unfold will be critical for companies that are hanging on by a thread, Gaudreault said.
The CFIB projects potential closures between 71,000 and 222,000, or between seven and 21 per cent of all businesses, depending on how the situation evolves. The corresponding job losses would range between 962,000 and a staggering 2,951,000, the organization said.
Including the businesses that became inactive in 2020, one in four businesses would be at risk of permanent closures at the high-end of the range, the CFIB estimate shows.
“We are not headed in the right direction and each week that passes without improvement on the business front pushes more owners to make that final decision,” Gaudreault said. “The more businesses that disappear, the more jobs we will lose and the harder it will be for the economy to recover.”
The latest CFIB estimate reveals a worsening outlook for small and medium-sized companies compared to the summer, when a similar CFIB survey found 158,000 businesses could close.
Federal, provincial, territorial and municipal governments have raced to keep small businesses afloat through the pandemic. Measures range from year-round patio permits for restaurants to massive nation-wide subsidies like the Canada Emergency Wage Subsidy (CEWS), which automatically ramps up for businesses that see activity deteriorate further.
In January, the federal government further increased the maximum subsidy rate to 75 per cent of eligible employee pay for a period starting in late December 2020 and ending in mid-March.
Ottawa also rejigged its rent-relief program, eliminating the requirement that landlords applied for the aid, which initially resulted in poor takeup.
Still, CFIB executive vice-president Laura Jones called on governments to help small business owners “replace subsidies with sales” by introducing safe pathways to reopen to businesses.
The organization estimates less than half of small businesses are currently fully open, down from more than 60 per cent in November. Just 36 per cent of those businesses are fully staffed and only 22 per cent are seeing normal sales levels.
The numbers are even lower for provinces that have implemented lockdowns, the CFIB said. Ontario, for example, has the smallest percentage of fully open businesses, at just 37 per cent.
Across the country, businesses in the hospitality industry — including restaurants, hotels and caterers — and the arts and recreation sectors — including gyms, venues and arcades — have been hardest hit, with roughly one in three entrepreneurs considering closing.