The Canadian Federation of Independent Business (CFIB) suggests that one in four SMEs might close their doors permanently before the end of the year, in particular because they are already in debt by the previous waves.
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“Necessarily that following two years of pandemic, obviously, then the many confinements with which we were confronted, several SMEs, it is sure that the arrival of a variant like this raises many questions for entrepreneurs”, says Francis Bérubé, CFIB Senior Policy Analyst.
The latest restrictive measures are hurting many businesses. Cinéplex has temporarily laid off nearly 1,000 employees. Air Transat has announced that it is canceling nearly a third of its flights.
“There are a lot of companies that got into debt to get through it, telling themselves that eventually, it would reopen and that activities would resume a little more normally and that companies, in quotes, were going to start over. On the other hand, the indebtedness, it remains ”, explains Simon Savard, principal economist at the institute of Quebec.
Government aid programs were more than necessary to prevent a wave of bankruptcies. But with these new restrictions, an increase in insolvency cases is now looming over entrepreneurs.
“The level of business bankruptcies is at the lowest we saw in 35. Then that is thanks to various state support programs. It has helped a lot of businesses. But these programs are temporary. There are a lot of these programs that … are finished or will end. So that eventually, things will normalize, ”emphasizes Mr. Bérubé.
In an attempt to keep their heads above water, companies have adapted to the new reality.
In retail, some companies that have migrated to online shopping; in the restaurant business, companies that have migrated to delivery. But it is certain that the companies which did not make these changes, they will have more difficulties to pass through quite simply ”, adds Mr. Savard.
In addition to all these challenges, there is the shortage of labor that has plagued SMEs for the past few months.
