Entrepreneurs are crucial to Ontario’s economic recovery
Small businesses are still recovering. After accumulating mounting debt caused by pandemic shutdowns, many continue to face a tsunami of issues: rising interest rates, labour shortages and supply chain constraints. As a potential recession looms, consumer behaviour has become unpredictable. As this transpires, debt and interest payment obligations continue to mount.
Even in good times, small business owners encounter challenges at various stages of growth. Enough is enough; small business owners need a break.
Real progress will only come from redoubling efforts to eliminate barriers and advance creative solutions to improve access to capital and other resources to support business success. We know that Ontario’s economic growth will be driven largely in part by entrepreneurs that launch and scale their enterprises — they just need a leg up to get there.
It is important to note there are several private and public sector options to support. For example, through the GoodSpark Grants program, Desjardins delivers $20,000 grants to 150 entrepreneurs each year, totalling $6 million invested into Canadian businesses within the last two years. These funds help entrepreneurs across the country to innovate and adapt to the next set of challenges in the economy and in the face of climate change.
In addition to this program, Desjardins supports a multitude of initiatives through partnerships with entrepreneurial incubators and regional business centres across the province to help entrepreneurs gain access to the necessary capital they need. The Ontario government also offers various grants and support to entrepreneurs, including the Northern Ontario Heritage Fund and Indigenous Economic Development Fund.
The timing for further creative solutions to capital is critical. Ontario began to see some positive momentum thanks to progress on vaccines and reopening. However, the road ahead remains uncertain for businesses and households.
According to data from the Ontario Chamber of Commerce’s 2023 Ontario Economic Report, the positive momentum we saw in 2022 has since slowed as businesses gear up for a major economic slowdown. Small businesses are significantly less confident looking ahead.
Throughout the pandemic, small businesses took on mounting debt caused by lockdowns and other economic factors. They received some reprieve when the Government of Canada extended its forgiveness repayment deadline for the Canada Emergency Business Account until the end of 2023. However, inflation, and a potential recession, as well as ongoing issues when it comes to labour and supply chains could still make it challenging for some small business owners to meet this repayment.
Furthermore, as these temporary measures expire, business owners will still need support to keep their doors open, restructure or grow.
Importantly and particularly after the pandemic when so many small businesses are still struggling with debt, grants play a key role. Debt, in general, is not always the right solution. Some businesses simply have less collateral. In other cases, irregular cash flows are merely a normal part of their operating model. Similarly, not all entrepreneurs have sufficient assets to secure loans.
This is where the private sector is so crucial. Credit unions are located in communities across the province, where they have strong, mutually beneficial, partnerships with many small businesses and a unique understanding of local economic needs. Through their products, services and mentorship, they empower small business owners to implement innovative ideas and make changes needed to adapt to new realities as they emerge from the pandemic.
Residents and communities can also continue to play a key role by supporting local businesses in their area.
As we look ahead, helping the next generation of entrepreneurs to grow and scale their business will be equally important. Canada is facing a record number of retirements, causing additional strain on an already tight labour market. According to Statistics Canada, one in five persons of working age are between 55 to 64. We will soon encounter complications when it comes to succession planning.
Entrepreneurship plays a critical role in Canada’s economy. Recognizing this, access to capital is crucial to supporting business survival, fuelling innovation and contributing to Canada’s recovery. Going forward, businesses and government must continue to support entrepreneurs and address capital and cost pressures to bolster our economic recovery and growth.