Over 200,000 Small Businesses Could Permanently Close Due to COVID-19: Report

January 22, 2021 Updated: January 25, 2021

Over 200,000 Canadian small businesses could permanently close due to the COVID-19 pandemic-related lockdowns, putting millions of private sector jobs at risk, according to the latest report by the Canadian Federation of Independent Business (CFIB), the largest small-business association in Canada.

The CFIB estimates about 181,000, or one in six Canadian small-business owners, are seriously considering closing their businesses for good due to the ongoing COVID-19 pandemic that triggered governments to impose sweeping “second wave restrictions and lockdowns.” COVID-19 is the disease caused by the CCP (Chinese Communist Party) virus, commonly known as novel coronavirus.

The latest estimate, based on a recent survey conducted with 4,129 members between Jan. 12 and Jan. 16, is on top of the 58,000 businesses that had become “inactive” in 2020 as reported by Statistic Canada, meaning 239,000 small businesses could vanish in Canada because of the virus-related closures; a stark contrast to the estimates last summer at 158,000. That translates to more than 2.4 million Canadians possibly losing their jobs in the private sector.

Simon Gaudreault, CFIB’s senior director of national research, was alarmed to see the increase in the number of businesses considering closing down permanently.

“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 in a statement. “The more businesses that disappear, the more jobs we will lose and the harder it will be for the economy to recover.”

The hospitality sector—which includes restaurants, hotels, and catering—faces the most risk with slightly over 28,000 businesses projected to close down. The report estimates it will take eight years for this sector to recover fully at the current pace.

The arts, recreation, and information sector—which includes gyms, golf courses, venues, and arcades—is next in line with over 10,000 businesses projected to shut their doors. These businesses will take only about one year and a month to recover, according to the report.

Although federal, provincial, territorial, and municipal governments have rolled out their version of subsidies programs in an attempt to sustain small businesses amid pandemic-related shutdowns, CFIB’s executive vice president Laura Jones says sales are better than subsidies.

“It goes without saying that supporting local is more important than ever,” Jones said in a statement. “Governments can also help small businesses replace subsidies with sales by introducing safe pathways for them to reopen to limited customers.”

CFIB also noted that the situation for Canadian small businesses are “precarious” as their estimates suggest less than half of them are fully open, down from more than 60 percent in November. Meanwhile, 36 percent are fully staffed and only 22 percent are making normal sales.

The numbers are even lower for Ontario, which implemented lockdowns with only 37 percent of small businesses open in the province, 32 percent fully staffed, and 18 percent having normal sales.

Jones said “2021 isn’t off to a great start for small business. After the tough financial and emotional slog to get through a historically difficult year, the beginning of 2021 feels more like the fifth quarter of 2020 than a new year.”

CFIB’s survey is not statistically randomized as the responses come only from its members. But a probability sample with the same number of respondents would have a margin of error within 1.5 percentage points, 19 times out of 20.