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Canadian businesses are closing at rates the country hasn’t seen since 2020

Businesses are closing at the highest rates since June 2020

It’s no secret Canadian businesses have taken a hit since the pandemic, and a recent StatCan report suggests things still aren’t looking up. 

In a Sept. 26 report, StatCan found that, as of June 2024, Canadian businesses are opening at the lowest rate since August 2021. The opening rate has dropped by 0.4 percentage points to 4.2 per cent. Similarly, businesses are closing at the highest rates since June 2020, with a closure rate of 5 per cent. 

Lars Osberg, a professor in Dalhousie University’s Department of Economics since 1977, said these post-COVID financial struggles are unfortunate, but not surprising.

“There is a good reason for this increase in bankruptcies,” Osberg said. “We had a surge in interest rates, and so this necessary surge in interest rates increases the debt payments of businesses.”

Osberg said this hike in interest rates is the biggest reason for businesses closing and fewer opening. 

“Just recently the bank has cut interest rates, but I mean from 2022 up until just a few months ago, they raised interest rates from about 0.25 per cent to about 5 per cent,” Osberg says.

“These are really rapid, large increases in interest rates. When interest rates go up that much, it means that people who are thinking of buying a house or starting a business have to borrow at higher rates, and so people do less of it and the economy slows.” 

June saw the number of active businesses in Canada drop by 1 per cent, a loss of 9,037 businesses.

That intimidating statistic didn’t stop Nina-Marie Blackmore, who, alongside Charlaine Durnford, opened up Pure Cafe in Porters Lake in July. 

Blackmore said while the recent report of business closures is worrisome, she’s optimistic about the future of Pure Cafe.

“Businesses are still recovering from COVID, and I think that has a lot to do with the closures,” said Blackmore. “I know for me with opening the business, I found there were so many flags and so much red tape that the government puts into place, and I know that probably has something to do with businesses closing, as well. They support small businesses, but they make it pretty difficult sometimes.” 

Blackmore said when opening the business, she was met with a lot of “money grab” permits that she would later be told didn’t need to be put into place. 

Despite these setbacks and the overall struggles of small businesses in recent years, Blackmore is excited to see where the cafe goes. She even hit the ground running before opening, amassing a following for the cafe via social media.

“Our community is very supportive,” Blackmore said. “We tried to get ahead of everything before opening so that people would know we were here, and it got people excited; they were trying to get in before we even opened.” 

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