Small Businesses Grapple with Financial Strain, Impacting Customers - Seite 2

"The rising costs of doing business may threaten a wave of insolvencies," said Brown. "Businesses will be dealing with the dual challenges of high inflation and the elevated cost of borrowing. We anticipate an increase in demand for credit, particularly from enterprises wrestling with existing debt. Additionally, companies impacted by natural disasters could experience extended recovery periods and require government support."

Across Canada, new business originations surpassed pre-pandemic levels in Q2, driven by seasonal trends. Year-over-year, several provinces saw significant increases: Alberta (27.4 per cent), B.C. (33.6 per cent), Ontario (34.7 per cent), and Quebec (24.1 per cent). Credit utilization for lines of credit (LoCs) and credit cards, which initially dropped during the pandemic, is rebounding. Since January 2022, LoC balances rose by 21 per cent, and credit card balances increased by 22.6 per cent annually, partly due to high rates of new card originations. The emergence of new businesses in Q2 contributed to increased credit demand, though not yet at pre-pandemic levels.

Government Support and Debt Repayments
Government-backed loans, like CEBA, were crucial for Canadian businesses, with 36 per cent of respondents utilizing them. However, concerns remain, as 36 per cent anticipate negative impacts, 45 per cent aim to clear debts by year-end, and 47 per cent foresee repayments extending into 2024. Simultaneously, 59 per cent of business owners stated that they feel unsupported by the government, with 47 per cent lacking sufficient government credit for Q4 2023. An overwhelming 84 per cent call for increased government intervention to address these challenges and support small businesses.

Tech Awareness Grows, Credit Score Knowledge Lags
Business owners are increasingly aware of their financial profiles, with 58 per cent recognizing their ability to access business credit reports. However, this awareness does not always extend to credit scores, as only 36 per cent of those familiar with business credit reports know their actual credit scores. Additionally, nearly half of business owners anticipate significant changes due to artificial intelligence (AI), with 49 per cent expecting it to reshape the competitive landscape, 44 per cent foreseeing alterations in the service delivery model, and 46 per cent believing that AI will disrupt their business models.