After two difficult years, small business owners are still dealing with a number of challenges and concerns. According to our recent Small Business Month survey, inflation has taken a toll, with 87 percent of small business owners polled saying they have increased prices as a result of rising business costs, and 78 percent admitting that this move is negatively impacting their business.
Supplies, fuel, and wages top the expenses impacting businesses according to our survey. In Quebec, wages are more likely to be the top expense.
“With interest rates continuing to hike, the quarters ahead might prove to be even more stressful for Canadian small businesses to manage,” says Jeff Brown, Head of Commercial Solutions, Equifax Canada. “Not only are they dealing with inflationary pressures on the cost of goods, supply chain issues, and the demand for increased wages, but they are also taking on more debt and we’re seeing delinquencies and insolvencies rise.”
Managing cash flows is also one of the major challenges experienced by 60 percent of survey respondents, with 59 percent wanting to grow their business but having limited access to business financing. A few (14 percent) have already experienced bankruptcy or insolvency of their business. Our Q2 2002 small business data also indicates other signs of stress including a drop in new business openings – down 49.7 percent. “Small business owners are juggling more now even as the pandemic becomes less of a concern,” says Brown.
The debt and delinquency trends suggest that small businesses are struggling in the post-pandemic recovery period.
The average balance for a small business for Q2 2022 sits at $37,000
Average debt for small businesses has increased by 14.9 percent year-over-year
Bankruptcies were up 11 percent year-over-year and up 12 percent against Q1 2022
“On a positive note, demand for credit is holding relatively steady since the end of 2020 with the higher growth coming from the low-risk segment,” says Brown. The story is the same regionally in the latest quarter with Quebec and Alberta displaying particularly strong growth in credit demand and Calgary reporting the strongest growth in new lending.
Want to learn more about small business credit trends? Watch our quarterly small business credit trend webinars.
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