Canadian small businesses that have taken on Covid-19-related debt now owe an average of $170,000, the Canadian Federation of Independent Business (CFIB) said Tuesday.
That figure nearly doubles to $333,174 for businesses in the hard-hit hospitality sector, the association said.
In total, the CFIB said small businesses now owe a total of $139 billion due to the pandemic, up from $135 billion in February.
“While the overall small business debt load due to Covid-19 has remained stable over the past six months, the actual repayment of this debt will be the next big obstacle that small businesses will face, especially as many are still seeing a slow pick-up in revenues, capacity restrictions and uncertainty heading into the fall and winter months” said Corinne Pohlmann, the CFIB’s senior vice-president of national affairs, in a release.
Around 71% of Canadian small businesses have taken on Covid-19-related debt, with customer-facing sectors bearing the brunt of it, the report said. More than three-quarters said it would take longer than a year to repay.
Businesses in the hospitality, arts, recreation and information sectors were most likely to have taken on debt as they’ve faced the strictest pandemic restrictions.
Conversely, the finance, insurance, real estate and leasing sector had the fewest businesses reporting debt. However, 50% of businesses in the sector indicated they still have Covid-19-related debt to pay.
For businesses that have been fully up-and-running, 56% noted they did not take on any pandemic debt. As a result, three-quarters of these businesses will have repaid their debt within a year, while 91% of them expect to repay their debt by May 2023.
The report presents findings from four CFIB surveys — most recently, an August online survey completed by 2,878 CFIB members. A probability sample with the same number of respondents would have a margin of error of +1.4%, 19 times out of 20.