Small businesses are struggling to repay debt due to interest rates, survey says
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According to the CFIB survey, one-third of Canadian small business owners say borrowing costs are causing difficulties, compared with about one-fifth of businesses at the start of the year.
Small business confidence in Canada declined sharply in October, new research suggests, dropping to levels not recorded since early in the pandemic.
The Canadian Federation of Independent Business (CFIB) said its latest business barometer survey found many businesses are struggling to repay debt accumulated during COVID-19 lockdowns as interest rates climb.
One-third of Canadian small business owners now say borrowing costs are causing difficulties, compared with about one-fifth of businesses at the start of the year, the business group said.
“Small businesses are facing a lot of worries right now,” Simon Gaudreault, chief economist and vice-president of research at CFIB, said in a statement. “Many have not yet repaid the debt they accumulated during the pandemic, while also facing another interest rate hike from the Bank of Canada due to the unresolved inflation challenge.”
The central bank raised its key lending rate by a half-percentage point to 3.75 per cent on Oct. 26, up from 0.25 per cent in March.
Among provinces, Ontario saw the lowest short-term outlook and the biggest drop in confidence this month, the CFIB said.
A Deloitte report, based on a Leger survey of more than 1,000 Canadians, found 76 per cent of those polled plan to rein in holiday spending because of higher food prices, followed closely by inflation worries and overall economic concerns.
The CFIB’s monthly business barometer survey in October was based on 752 online responses from business group members.
The polling industry’s professional body, the Canadian Research Insights Council, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.