Pandemic raises Alberta small business debt to $21 billion

by Stephen Dafoe

by Stephen Dafoe

Eighty per cent of small businesses in Alberta have taken on debt due to the impacts of COVID-18 on their companies. The data comes from a new Canadian Federation of Independent Business (CFIB) report that indicates debt per business averages $186,000 in Alberta.

Nationally, pandemic-related small business debt is $135.1 billion, with more than 15 percent of the total being in Alberta businesses’ hands. 

“Over the last six months, the average debt taken on by small businesses to deal with COVID-19 has grown significantly,” said CFIB Executive Vice-President Laura Jones in a media release. “While many businesses had previously reopened and were attempting to regain lost sales, the second wave and the restrictions that came with it are putting a massive wrench in an already slow recovery for small businesses.”

The hospitality sector had the highest uptake of pandemic loans at 91 per cent. Arts, rec and Info services as well as social services came second at 87 per cent borrowing. The retail sector saw 75 per cent of businesses borrowing, while agriculture and natural resources sectors saw less than half of businesses taking on debt at 49 per cent. Fifty-nine per cent of surveyed companies took advantage of the Canada Emergency Bank Account (CEBA) funding from the federal government.

During the most recent economic shutdown, Morinville Online reached out to several local businesses and found revenue declines in the 50 to 70 per cent range.

CFiB’s reports indicate 76 per cent of those who have taken on pandemic debt expect it will take more than a year to repay the loans. Eleven per cent feel they may not be able to repay their COVID-19 related debts at all.

Forty per cent of businesses surveyed expect it will be at least another year before returning to profitability. Only a quarter of Canadian businesses’ sales are back to pre COVID-19 numbers.

The report’s lead author and CFIB’s research analyst Taylor Matchett said small businesses need customer support. 

“We must also keep in mind that businesses are much more fragile now than at the beginning of the pandemic, and every effort should be made to keep businesses open while managing the health implications of the virus.”

The full report is available online at https://www.cfib-fcei.ca/sites/default/files/2021-02/SME-Debt-and-Profitability.pdf

Print Friendly, PDF & Email

Comments

comments