New data show the number of Canadian businesses filing insolvencies has increased at a record rate.
A report from the Office of the Superintendent of Bankruptcy released Friday found 4,810 businesses filed insolvencies in 2023.
The Canadian Association of Insolvency and Restructuring Professionals (CAIRP) says it’s an increase of 41.4 per cent from the year prior and the largest jump in 36 years of records.
André Bolduc, a licensed insolvency trustee and chair of the CAIRP, believes the rise is due to economic pressures and the recent payment deadline for CEBA loans given by the federal government during the COVID-19 pandemic.
“Some businesses may not be able to manage the increases to their monthly bills, especially if they are already finding it difficult to drum up sales. That strain, combined with any additional financial challenges or setbacks this year could force businesses to shutter,” Bolduc said.
Bolduc notes insolvency rates were rising to catch up to pre-pandemic norms, but they’ve now surpassed previous figures and are likely to continue to rise in 2024.
The Canadian Federation of Independent Business (CFIB) says Friday’s report only represents a small fraction of businesses forced to close their doors.
“That’s just sort of a top-line number. What we are seeing in Alberta is a larger amount of businesses who are just shutting down altogether, and that in and of itself is problematic,” said Andrew Sennyah, a CFIB senior policy analyst.
According to the Calgary Chamber of Commerce, 95 per cent of businesses in the city are considered small, and the possibility of losing them is cause for concern.
“A lot of them just aren’t seeing a future where they can have a sustainable and prosperous business, so unfortunately, in many cases, they are choosing to close their doors,” said Ruhee Ismail-Teja, the chamber’s vice-president of policy and external affairs.
The chamber says rising costs are impacting almost every business.
“So, 78 per cent of businesses in Calgary, that’s their top concern,” Ismail-Teja said.
“We see about 62 per cent are concerned with inflation, but others are concerned with rising interest rates and what that means for debt repayment costs.
“Many are having trouble being able to reinvest in their business.”
The chamber is calling on all levels of government to come together to support businesses by reducing costs, taxes and regulatory burdens.
The CFIB is also issuing a plea for people to spend locally.
“For every dollar that is spent at a local small business, 66 cents stay local. This is in contrast to a multi-national, where 11 cents stay local,” Sennyah said.
The CAIRP recommends businesses that are struggling seek professional help sooner rather than later.
