Federal data says 120,000 small businesses 'vanished' due to COVID lockdowns

Canada’s draconian lockdowns permanently shuttered 120,000 'ma and 'pa shops during the COVID pandemic, costing those families their livelihoods.

According to the Department of Industry, the federal government’s response to the pandemic resulted in fewer small businesses than in 2020. Figures showed 120,344 businesses “disappeared,” said a department report Key Small Business Statistics. 

“The rate of business creation sharply declined during the Covid-19 pandemic reaching a record low of 3.8 percent in 2020,” it said. “This is a decrease of two percentage points compared with the year 2019.”

Small Business Statistics counted 1,216,550 operations nationwide last year compared to 1,226,454 in 2020, reported Blacklock’s Reporter.

Despite new start-ups offsetting some closures, Canada had a net loss of 10,100 retailers, 2,700 restaurateurs and hotelkeepers and 3,800 wholesalers between 2020 and 2023. In the two decades prior, the number of small businesses increased every year except for 2013, 2016 and 2020.

As part of Ottawa’s generous COVID support program, taxpayers paid $37.7 billion in pandemic wage subsidies to businesses with tax debts and $1 billion to insolvent companies.

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The economic recession during COVID caused more business closures than the 2008 financial panic, according to Statistics Canada. Nationwide the private sector payroll declined from 12,303,500 workers to 12,214,400, a loss of 89,100 jobs, wrote researchers.

“The Covid-19 pandemic posed significant challenges to the Canadian economy,” said Business Statistics. “The resulting economic contraction significantly impacted employment.”

Canadians filed 128,043 bankruptcies last year, nearing the postwar high of 158,000 filings during the 2008 financial crisis.

“Insolvency is a lagging indicator,” Superintendent of Bankruptcy Elisabeth Lang testified at 2020 hearings of the Commons finance committee. “Our historical data shows there will be an increase, but I don’t think it will be sudden.”

However, the StatsCans report, A Profile Of Corporate Exits And Insolvencies, said “formal insolvencies are not the whole story” — a sentiment backed by the Canadian Federation of Independent Business (CFIB).

According to Public Health Agency of Canada internal reporting, at least 45% of Canadians contracted COVID, far higher than the modelling used to impose lockdowns, vaccine passports and gathering restrictions.

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“Formal insolvency is but one path a business in distress may take,” it reads, as many businesses simply exited the economy. They did not appear in bankruptcy court statistics.

“The term ‘business exit’ refers to the permanent closure of a business and an exit from the marketplace,” said Corporate Exits. “A business owner may abandon the business or walk away without a formal process,” it added. 

CFIB CEO Dan Kelly testified at the Senate national finance committee that hundreds of thousands of businesses are “essentially dead” but haven’t finalized the closure process yet. “They have a paper sign saying, ‘Temporarily Closed,’” he added.

“We are going to see those businesses now formally fail, with more boarded-up signs,” continued Kelly. “Our research shows one in seven businesses will fail.”

The findings represent a larger exit rate during COVID than during the 2008 financial crisis, wrote analysts. 

The Bank of Canada in a 2022 survey estimated half of businesses that shuttered their operations during the pandemic lockdowns remained closed five months later.