


How to Support Small Businesses in Canada
Three years after the pandemic, almost half (49%) of small businesses are making below-normal revenues. For those businesses that have gotten their revenues back to normal, high costs are still making it hard to make a profit.
“Many business owners say they are in a worse position now than they were before the pandemic.“
It is always unfortunate when a local shop or restaurant closes down after decades in business. But I’m not surprised at the share of small firms deciding to throw in the towel. I get a lot of messages and calls from small business owners across Canada, sharing with me their challenges and frustrations. Many business owners say they are in a worse position now than they were before the pandemic.
“It is extremely disappointing that the government thinks that now that we are open, things are back to normal and we do not need any help. We have been lucky enough to survive but we are still struggling tremendously.”
“We need more employees, however, we are getting to the point of not being able to afford them. We are doing more with less as the cost of doing business is getting out of hand.”
“Supply chain issues continue to plague the automotive parts industry. A shortage of labour is holding back production as well as adding overtime costs to our expenses.”
These are just some of the messages CFIB has received. While I would love to say that it is business as usual, there are many pressing issues complicating business recovery.
Rising Costs and Debt are Crippling Small Businesses

Small business owners are dealing with rising costs on almost every line of their budgets. Tax and regulatory costs are causing challenges for 55% of small businesses. They are also facing high fuel and energy, wage, insurance, and product input costs.
Then, there are labour shortages, mandatory employer-paid sick days, and minimum wage increases. Add government red tape and barriers to internal trade, and you can only imagine how overwhelmed a business owner may feel nowadays.
“Over half (58%) of small businesses are still carrying their pandemic-related debt, at an average of $105,000.”
Our research shows that over half (58%) of small businesses are still carrying their pandemic-related debt, at an average of $105,000.
More than 900,000 Canadian small businesses had to take on a Canada Emergency Business Account (CEBA) loan to survive the pandemic. Yet only 13% of businesses have been able to fully repay it, according to Export Development Canada.
For those who have not yet repaid their CEBA loan, it is like the Sword of Damocles is hanging over their head. It is a daily reminder that if they do not repay the loan by the end of 2023, they will lose the ability to have up to $20,000 of their loan forgiven and will start accruing interest. In the current economic environment, where costs on all fronts have been skyrocketing, carrying so much debt could force many businesses to close their doors.
“More businesses will fail unless the federal government steps in to help with an extension of the CEBA loan deadline to the end of 2025.”
My concern is that more businesses will fail unless the federal government steps in to help with an extension of the CEBA loan deadline to the end of 2025. If we give businesses more time to repay these loans, we believe more of them will survive.
Reducing Credit Card Fees can Boost Competitiveness

It is not just crushing debt that has been squeezing small business owners. High credit card fees have been top of mind for many small businesses, especially those in consumer-facing sectors.
“A majority (81%) of small firms surveyed by CFIB say they take a hit to their bottom line to cover the costs of accepting credit cards.”
More Canadians than ever have been using credit cards in the last few years due to the pandemic, growing online sales, and inflationary pressures. But processing fees for merchants add up quickly. In fact, a majority (81%) of small firms surveyed by CFIB say they take a hit to their bottom line to cover the costs of accepting credit cards.
CFIB has long been fighting to see a reduction in credit card fees and was pleased when the 2023 federal budget brought some relief on the credit card front. The federal government reached a deal with Visa and Mastercard to lower credit card fees by up to 27%. Ottawa has also committed to encouraging reductions to other cards, such as American Express. While the government has yet to share more details, the announcement was welcome news. It would give small businesses some breathing room and alleviate some of their financial pressures.
There is Good News on the Horizon for Small Businesses

Though businesses have been through hell and back over the past few years, the Canadian economy – like small business owners – is resilient. While inflation is still high, CFIB’s latest economic forecasts suggest we’re headed toward a slowdown rather than a recession in the short term. This seems to be confirmed by the Bank of Canada’s recent decision to hold its policy interest rate at 4.5%, with Governor Tiff Macklem saying it is encouraging to see inflation decline. As we head into the busy summer months, this is cause for cautious optimism.
But more can be done to help small businesses and ensure Canada’s strong economic recovery. The federal government needs to be bold and CFIB has several recommendations on what needs to be done now.
“Reduce the regulatory burden on small businesses and prioritize regulatory modernization.”
These are CFIB’s recommendations to Ottawa:
- On CEBA: Extend the CEBA repayment deadline to the end of 2025, increase the forgivable portion of the CEBA loan to at least 50% and ensure that all CEBA loan recipients who received it in good faith but are now deemed ineligible get to keep the forgivable portion.
- On merchant fees: Lower merchant fees to no more than 1% of the total sale, ensure fees for e-commerce are kept low to allow small firms to compete online, and protect low-cost Interac debit and the Credit Card Code of Conduct.
- On red tape: Reduce the regulatory burden on small businesses and prioritize regulatory modernization.
- On carbon pricing: Pause carbon price increases, immediately return $2.5B in federal carbon tax revenues collected from small businesses since 2019, and reconsider the entire carbon pricing strategy with a focus on technology and other approaches to reduce greenhouse gas emissions.
- On federal taxes: Lower the federal small business tax rate from 9% to 8%, at least for the next two years, and increase the small business deduction threshold from $500,000 to $600,000, followed by indexing it to inflation.
- On payroll taxes: Introduce a targeted Employment Insurance (EI) credit for small businesses to lower a small employer’s premium rate from 1.4 times the rate of the employee to the same rate paid by the employee.
- On labour shortages: Help businesses deal with the shortage of labour by simplifying immigration processes, incentivizing investment in automation, and introducing fiscal measures to encourage older workers to stay or return to the workforce (including making EI voluntary for them).
Small businesses across all sectors and regions are battling high inflation, heavy tax burdens, rising property taxes, and massive COVID debt levels. It is time governments take the well-being of small businesses into consideration and commit to making the environment for entrepreneurs a positive one, not making it even tougher.



