Posthaste: Small firms have piled on $117B in new debt, but struggling to recover as staff prefer to stay on CERB - Financial Post

Good morning!

Prime Minister Justin Trudeau said earlier this month that the federal government took o debt so Canadians don’t have to. But companies are taking on debt anyway.

According to a new survey by the Canadian Federation of Independent Businesses, three quarters of small businesses have taken on debt due to COVID-19. And as many as 68 per cent of those with debt think it will take more than a year to pay off.

“Government debt has ballooned and so too has the private debt taken on by small businesses to deal with COVID-19,” Laura Jones, executive vice-president at CFIB, said in a press release. “I’ve talked to many businesses that are open again, but are worried about being able to outrun the debt they have accumulated, particularly with sales still down. Recovery is going to be a slow slog and both governments’ and customers’ support is critical to make it happen.”

Small businesses across the country have incurred average debt of around $135,000.

“Based on these survey results and after adjustments to reflect the entire economy, CFIB estimates that the total debt taken on so far by Canadian small businesses as a result of COVID-19 is $117 billion,” the business association said in a note published Wednesday.

For the most part, Ottawa and the provincial governments have been lauded for their robust response to the pandemic. Programs such as the Canada Emergency Response Benefit and Canada Emergency Wage Subsidy have kept many families and companies afloat.

But the reopening and recuperation phase remains patchy and unclear across the country.

A separate CFIB survey on small business shows businesses are finding it difficult to rehire staff with only a third of small firms reporting that they are at normal staffing levels, and one quarter having a hard time finding the staff they need to operate.

“Staffing is one of the many challenges for small businesses trying to get back to normal,” CFIB president Dan Kelly in a press release. “More than a quarter (27 per cent) of small firms report that some of their laid-off staff have refused to return to work when recalled.”

According to small business owners, as many as 62 per cent of workers said they would prefer to stay on CERB, 47 per cent are concerned about their and their family’s physical health, and just over a quarter are concerned about childcare obligations. Around 16 per cent feel there are not enough hours or work available, and seven per cent are wary of taking public transportation.

“It is clear that CERB has created a disincentive to return to work for some staff, especially in industries like hospitality and personal services,” Kelly said. “CERB was created as emergency support for workers who had lost their job due to the pandemic, not to fund a summer break. This is why it is critical that all parties support the government’s proposed change to end CERB benefits when an employer asks a worker to return to work.”

In June, Ottawa said CERB will continue to pay out $500 a week for another eight weeks, or till September. The $500-a-week benefit had, as of July 5, paid out around $54.8 billion to 8.25 million people.

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https://news.google.com/__i/rss/rd/articles/CBMikwFodHRwczovL2ZpbmFuY2lhbHBvc3QuY29tL2V4ZWN1dGl2ZS9wb3N0aGFzdGUtc21hbGwtZmlybXMtaGF2ZS1waWxlZC1vbi0xMTdiLWluLW5ldy1kZWJ0LWJ1dC1zdHJ1Z2dsaW5nLXRvLXJlY292ZXItYXMtc3RhZmYtcHJlZmVycy10by1zdGF5LW9uLWNlcmLSAQA?oc=5

2020-07-17 19:36:32Z
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