(Kirsten Spek works at her hair salon Couture Hair and Beauty Derek Brade/CHATNewsToday)

By Tiffany Goodwein

Small businesses struggling to pay COVID-19 debt: CFIB

Aug 31, 2021 | 8:11 PM

MEDICINE HAT, AB – At Couture Hair and Beauty, Kirsten Spek, gets ready for another busy day with clients. For the business owner, the past 18 months have been a whirlwind with ongoing restrictions and shutdowns. Like many businesses impacted by the restrictions, that has had an impact financially.

And while support was provided by government many business owners say they are struggling to pay it off.

A new report by the Canadian Federation of Independent business found across Canada, small businesses have taken on an average of $170,000 in debt since the pandemic. In Alberta, that number is much higher.

“Now that we are well into the 18 months of the pandemic here. That number is now $335,000 per Alberta small business as the average which is really a staggering amount,” said Annie Dormuth, provincial affairs director of the CFIB.

As a result, the CFIB says Alberta has the highest rate of businesses permanently closing or considering bankruptcy.

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“A lot of this we believe is attributed to the fact that prior to the pandemic the province was in a prolonged economic recession, coupled with the impacts of the pandemic, have really, really put Alberta businesses in a very worrisome position,” Dormuth said.

For Candace Mastelotto, an independent stylist, she’s not surprised by the report

“I’m not surprised at all, because I’m still far behind as well. I don’t know where they are expecting that extra income to come from when for five months of the calendar year you have been shut down,” she said.

Spek said with three rounds of shutdowns and concerns of a fourth, many business owners are feeling at a loss.

“I think anyone who was considering opening a small business to employ more people is now probably scared off. I think there are a lot of people wondering as a small business owner where they go from here, because at the end of the day if they can’t get their business to make enough money to pay off that debt they are still responsible for it, and they are going to have to find a way to make that money,” Spek said.

Spek added that government support loans come with deadlines to pay them back, and for
impacted businesses, those deadlines are unreasonable.

“How do you expect people to pay that off in a reasonable and timely manner when you are constantly being shut down again? she said.

Over at the Cliff Restaurant, manager Ritesh Sharma said even though they are open generating the same revenue as before has been hard.

“Our costs have increased, because we have to follow the COVID-19 protocols, and due to COVID-19 our cleaning products, our masks that increases the cost. But we are still struggling with the revenue because people are scared to come into the restaurant. People are scared because of COVID-19.”

On top of that, Sharma said finding staff is one of the biggest challenges right now.

He said he has tried to recruit staff, but roughly 80 percent of the people he has called in for an interview don’t show up.

“People don’t want to work, they are scared if they are going to get laid off again.”

With only 39 per cent of businesses at normal sales levels the CFIB is calling on the government to offer a number of new supports to ensure businesses don’t accumulate more debt. Those include:

• provincial “stay open” strategies that make avoiding future lockdowns and business closures a top priority.
• Maintain support programs and subsidies until the entire economy can reopen, including international borders, and all small businesses can serve customers in person.
• Extend the repayment term for the Canada Emergency Business Account (CEBA) loan to December 31, 2024 to give all businesses a chance to return to normal sales volumes.
• Provide additional rounds of funding through provincial grant programs.