Over half (51%) of small business owners now say borrowing costs are causing difficulties for their business, according to the latest Canadian Federation of Independent Business (CFIB) Business Barometer.
Tima Miroshnichenko
This indicator has surpassed its historical average of 22% and is at its highest point since CFIB began tracking it in 2009. Following a sharp increase in two months, a record share of businesses (36%) also cited a shortage of working capital as one of their biggest limitations on growth, said the CFIB.
The national organization said many businesses were having difficulties with other costs in September: 67% (+9% since August) of businesses reported that fuel and energy costs were causing difficulties, 62% (stable) kept struggling with wage costs and 61% (stable) flagged tax and regulatory costs.
“The Bank of Canada tapped the brakes more firmly with its rate hikes in June and July. Although it kept the rate unchanged at 5% this September, a large and growing number of businesses now deal with significant financing challenges, on top of the already very difficult business environment” said Andreea Bourgeois, Director of Economics at CFIB. “Small businesses reinvest 66 cents of every dollar earned back in their communities. With holiday season fast approaching, this is another reminder to support local businesses whenever possible.”
“Many of the Business Barometer indicators this month continue to point to a tough business environment and sluggish recovery,” said Simon Gaudreault, CFIB’s chief economist and vice-president of research. “Small businesses weren’t overly optimistic and had challenges accessing financing even before the recent Canada Emergency Business Account (CEBA) and Employment Insurance (EI) announcements. One can only presume that things will get worse for them if there’s never any relief in sight.”
The small business confidence index over the next 12 months posted a significant drop in optimism, down six points to 48.7, said the report.
“The country’s two largest provinces, Ontario (48.9) and Quebec (49.8), were at the bottom of the optimism scale, both registering confidence levels below 50. Among the sectors, agriculture (38.0), retail (42.3) and wholesale (47.4) had the lowest levels of confidence, while businesses in service sectors, such as information and recreation (63.2) and health and education (65.7), topped the rankings,” it said.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)
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