Save for later Most independent businesses have racked up large debts during the pandemic, according to a new report from the small-business lobby, with entrepreneurs in the hospitality and

recreation sectors hit the hardest. The Canadian Federation of Independent Business (CFIB) estimates that, based on a recent survey of its members, about seven in 10 small businesses have

taken on new debt because of the pandemic, with an average debt of almost $170,000 each. But there is a huge disparity between industries: Businesses such as restaurants and gyms, which have

faced more operating restrictions to stop the spread of COVID-19, have taken on much more debt than those whose work can more easily be done from home. About nine in 10 businesses in the

outrunning their debt.” Small businesses – companies with fewer than 100 employees – represent one of the largest economic drivers in Canada, employing more than two-thirds of the private

labour force. But businesses that rely the most on human-to-human contact have had to either keep their doors closed because of public-health rules or limit the number of customers they can

serve at a time. Karmjit Gill, who owns Karma’s Punjabi Cuisine in Vaughan, Ont., said he took on debt to launch his restaurant in late 2018 across the street from Canada’s Wonderland. Mr.

Gill said many of his early customers were visitors to the amusement park, but business dried up last year when the park was kept closed because of public-health orders. “2020 was supposed

to be the year where we saw some profits, but the pandemic had a huge impact,” Mr. Gill said. He said he took out a loan through the federal Canada Emergency Business Account (CEBA) program,

and he recently received provincial funds through the Ontario Small Business Support Grant. He said the only way to get through the next year might be to take on more debt, but he’s not

sure if he’s ready to do that. “I’ve sacrificed so much … it’s just like, ‘Do I let it all go for nothing? Or do I just hang on to it?’” he said. “It’s just the carrot dangling in front of

you and you’re like, ‘I’ve got to reach out for something.’” CEBA provides partly forgivable loans of up to $60,000 that are interest-free until December, 2022. The program was one of the

first business supports announced by the government early in the pandemic, and has proven to be one of the most popular among small businesses. Federal statistics show that more than 800,000

businesses have taken CEBA loans, for a total of more than $33-billion. Applications for CEBA loans are being accepted until March 31. Ms. Jones said the CFIB is hoping the government will

expand the program by increasing the maximum amount of the loans, making a larger share of the loans forgivable and giving business owners more time until interest kicks in. The CFIB’s

survey, which polled 3,554 of its members from Feb. 4 to Feb. 8, suggested companies in sectors such as professional services and real estate were less likely to take on debt, and reported

lower debt loads. Businesses in Ontario, Alberta, Saskatchewan and Manitoba were also more likely to report higher levels of debt. Gitu Duggal, owner of the Beauty Destination Spa n

Esthetics in Hamilton and Burlington, Ont., said she has relied on a CEBA loan and a personal line of credit to get through lockdowns in which her personal-care businesses couldn’t see

clients. She said she is facing the prospect of closing down one of her two locations because of the pile of bills. “People talk about, ‘Oh, you got a CEBA loan,’” Ms. Duggal said. But, she

says, most of it will have to be paid back. “It’s not for free.” She said the most difficult part of planning for the future is the uncertainty, and the prospect of future virus waves and

lockdowns. “April to June is our main business, and last year we were closed throughout that time,” she said. “With all the predictions, we all know this is coming back and we’ll be locked

down again soon.” _Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. __Sign up today__._