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The number of business bankruptcies recorded in Canada has jumped by 41% in 2023

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A man walks near a store announcing a closing sale, in Montreal .

Radio-Canada

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Times are tough for small and medium-sized businesses (SMEs). So much so that the number of those declaring bankruptcy continues to increase. In 2023, Quebec companies won the sad prize of the most affected group. And the first weeks of 2024 have not seen any improvement, on the contrary.

For about a month, we have seen an increase in everything related to bankruptcy, consumer proposals, commercial proposals, confirms Stéphane Leblond, authorized insolvency trustee.

The Canadian Association of Insolvency and Reorganization Professionals (CAIRP) responded in a press release on February 2 that the number of business insolvency files in Canada [in 2023] recorded its highest sharp increase in 36 years of statistics kept by the Office of the Superintendent of Bankruptcy.

61% of the 3,702 business bankruptcies recorded in the country were in Quebec, we observe in Statistics Canada data.

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According to the Canadian Federation of Independent Business, nearly 20% of SMEs in the country are at risk of going bankrupt due to the refusal to Ottawa to postpone the repayment date for emergency loans granted during the pandemic. (Stock image)

Stéphane Leblond notes that it is very small businesses that are facing the greatest financial difficulties in the current economic context.

His analysis is based on the fact that with the abnormally high interest rates for two years and emergency loans of the federal government which should have been reimbursed on January 18, many companies thought they could renew or refinance, in some cases, it does not work.

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Professor of economics at UQTR, Benoît-Mario Papillon recalls that, for many companies that were created in the last decade, with a business model where the cost of credit is from 3% then the financing rate was 5-6% to now find yourself with costs around 10%, it's very difficult to remain profitable.

The fact that more than half of the bankruptcies recorded in Canada in 2023 concern Quebec companies worries the opposition in the National Assembly. Liberal MP Frédéric Beauchemin, who acts as spokesperson for the official opposition on the economy and innovation, believes that the element that most harms Quebec SMEs is productivity.

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Quebec Liberal Party MP Frédéric Beauchemin speaks to the media before the party's caucus on Tuesday, September 5, 2023.

For MP Beauchemin, the government must act and put in place credits that will help our businesses become more competitive and that will ensure that they want to invest in their business model, in their technology, to be more modern, to do more with less, that's what is important to do.

Tax credits must target the right need, warns Frédéric Beauchemin. There are a little more than 46 credits to help SMEs in Quebec. About 2/3 of these are for job creation, to improve wages. In a context of labor shortage, there are around 200,000 vacant positions in Quebec, making credits that will create other additional vacant positions doesn't really help there .

The Minister of Economy and Innovation, Pierre Fitzgibbon, responded to the MP on the social network . According to him, relative bankruptcies have always been higher in Quebec and the true and only measure is the number of definitive closures of businesses.

with information from Flavie Sauvageau

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