Uptick in business bankruptcies just the tip of the iceberg: CFIB

A small business lobby group says commercial bankruptcies are rising in Canada and even more small businesses are at risk of closure.

Statistics Canada data show that small business insolvencies have been on an upward trend since May 2021.

But in a report on Thursday, the Canadian Federation of Independent Business said its own survey data indicate only 10% of Canada’s small business owners would file for bankruptcy if their business was no longer solvent.

It said 46% of business owners say they would simply stop operating rather than go through the bankruptcy process.

“Official Canadian data on small business bankruptcies doesn’t account for zombie companies or businesses that would rather wind down than file for bankruptcy,” CFIB chief economist Simon Gaudreault said.

“Our research provides a broader perspective on business insolvencies in Canada and shows that the rising number of small business bankruptcies is just the tip of the iceberg.”

CFIB said its data show 54% of business owners are yet to return to normal pre-pandemic revenue levels, and 62% are still carrying pandemic debt.

The group also said more than one in six Canadian small business owners say they are currently considering going out of business.

The lobby group wants government support to help Canada’s small business sector get through the next few months and deal with challenges like pandemic-related debt and supply chain issues.

The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.