Fewer people are opening businesses, more are closing—this isn't a feeling, it's data
In April 2026, the Canadian Federation of Independent Business (CFIB) released a two-phase research report with a blunt title: 'Entrepreneurship Drought.' The core conclusion is simple: Canada has seen more business closures than new openings for six consecutive quarters.
This isn't a pandemic shock—the pandemic ended two years ago. This is a deeper issue.
CFIB Report Key Data
- 6 consecutive quartersBusiness closures > new openings (since early 2024)
- Q2 2025 Business Exit Rate5.6%Q4 New Business Entry Rate Only4.8%— All worst levels outside of pandemic
- Ontario Is the Absolute Epicenter:Over 70% of net business losses in Canada come from Ontario
- From February 2024 to August 2025, Ontario saw a net closure of3,519 companiesBusinesses; other provinces added a net of 2,777 during the same period.
- 55% of business owners would not recommend starting a business, 73% have no confidence in the federal government
What's Happening in Ontario?
National data already looks weak, but Ontario's numbers alone are even more alarming.
Ontario Business Exit Rate as High As6.7%far above the national average. From February 2024 to August 2025, Ontario lost a net 3,519 businesses. Over the same period, other provinces combined gained a net 2,777.
In other words: Canada's business failure problem is essentially Ontario's problem. Other provinces are slowly recovering; Ontario is still declining.
Where's the problem? CFIB points out several structural shortcomings in Ontario:
- High Business Tax Burden:Ontario’s small business tax rate of 3.2% is one of the highest among Canadian provinces
- High Regulatory Costs:Ontario's licensing and approval processes are more complex than in other provinces
- Labour Costs:Minimum wage keeps rising, squeezing profit margins for small businesses
- Commercial Rent:Toronto/GTA commercial rents rank among the highest in North America
Which Industries Are the Hardest?
Not all industries are shutting down. Some are growing, others are accelerating their decline:
| Industry | Net Business Decline | Key Pressures |
|---|---|---|
| Transportation | -1,412 | Fuel costs, driver shortages, soaring insurance |
| retail | -1,111 | E-commerce impact, rising rent, consumer downgrading |
| Wholesale | -863 | Supply chain costs, tariff uncertainty |
| Professional Services | significant decline | AI Disruption, Major Client Loss |
| Finance, Insurance, Real Estate | significant decline | Interest rate fluctuations, regulatory tightening |
If you're a small business owner in these five industries, this table should make you uneasy. Also: retail and transportation are the most concentrated industries for entrepreneurs—restaurants, convenience stores, freight logistics, and import/export trade.
StatCan's long-term data: half of all businesses don't survive 10 years
CFIB data shows short-term fluctuations, but StatCan tracks longer-term survival rates, and the numbers are colder:
- 5-year survival rate:Goods-producing businesses 69.2%, service businesses 66.9%
- 10-Year Survival Rate:Goods-producing: 51.4%, Service businesses: 46.4%
- 20-Year Survival Rate:Goods-producing: 29.5%, Service businesses: 23.9%
- Micro-enterprises (1–4 people):5-Year Survival Rate Only 62.5%
Translation: out of ten new businesses, about six and a half survive after five years, and fewer than five after ten. Most Chinese-Canadian small businesses (restaurants, convenience stores, bubble tea shops, nail salons) are micro-enterprises with 1–4 employees, with a 5-year survival rate even lower than average.
What policy is CFIB pushing?
CFIB's Part 2 report proposes a series of policy recommendations, with two core points:
1. Federal Small Business Tax Rate: 9% → 6%
The current federal small business tax rate is 9%; CFIB is calling for a reduction to6%Also raised the tax rate threshold from $500,000 in annual revenue to$700,000, and indexed to inflation.
Why is $700,000 such an important number? Because many small businesses in the $500,000–$700,000 range haven't stabilized their profits yet, but their tax rate jumps to the general corporate rate (15%). This discourages owners from expanding—earning an extra $200,000 in revenue might not leave much more after taxes.
2. Ontario small business tax rate: 3.2% → 2% → ultimate target 0%
Ontario is the province most criticized by CFIB. Currently, Ontario's small business tax rate is 3.2%; CFIB calls for a reduction to 2%, with a long-term target of0%。
How politically feasible this is remains unclear, but CFIB's logic is straightforward: If Ontario keeps driving businesses away with high taxes and heavy regulation, neighboring Alberta and BC are already luring them with lower rates.
This isn't meant to scare you, but you need to know what waters you're swimming in.
More closures than openings isn't just news to 'watch'—it's affecting your business right now:
Commercial Real Estate:If the shops around you are closing every day, your landlord might be more anxious than you. Now could be the best window to negotiate lower rent. Landlords would rather reduce rent to keep tenants than face vacancy.
Supplier:If your upstream suppliers are in wholesale/transportation, their cash flow may be more fragile than you think. Keep a backup supplier and negotiate more flexible payment terms.
Loan:If CFIB's small business tax reduction proposal is adopted, the tax savings become your cash flow. But it will take at least 6-12 months for the policy to take effect. If you need funds now, don't wait.
Exit:If you're considering selling your business, now is not a good time. There are fewer buyers than sellers, and valuations are declining. If you must sell, give yourself at least six months to find the right person.
CFIB's data affects you whether you know it or not. The businesses that survive a wave of closures aren't the smartest—they're the ones with the best cash flow management.
Want to know how your business can optimize cash flow and access the grants and loans you're entitled to in today's business environment? We'll do a free assessment for you.
Frequently Asked Questions
Q: Is the data in the CFIB report reliable?
CFIB (Canadian Federation of Independent Business) is Canada's largest small business advocacy organization, representing over 97,000 member businesses. Its data is based on StatCan business registry statistics and CFIB member surveys, with a published methodology. Reports Part 1 and Part 2 were released on April 15 and April 27, 2026, respectively.
Q: Why is Ontario more affected than other provinces?
Ontario's business tax burden (small business rate 3.2%), regulatory complexity, and commercial rents are all above the national average. Toronto/GTA commercial rents rank among the highest in North America. Ontario's rising minimum wage also squeezes small business margins.
Q: When will the CFIB-proposed small business tax cut take effect?
CFIB's policy recommendations are currently at the advocacy stage, with no official response yet from the federal or Ontario governments. Even if adopted, legislation and implementation typically take 6–18 months. Business owners are advised not to wait for policy changes to improve cash flow.
Q: What should small businesses prioritize during an economic downturn?
Prioritize cash flow management: renegotiate rent, optimize supplier terms, apply for available government grants and tax credits (e.g., SR&ED).&ED;Ontario Job Grant, etc.). Even if revenue drops, as long as cash flow is positive, your business can survive until the economy recovers.
Q: Is it a good time to start a business in Ontario now?
It depends on the industry and preparation. Traditional sectors like food service and retail do face greater challenges. But technology-driven services, export trade (leveraging the weaker Canadian dollar), and industries with dense government grants (green energy, AI applications) still have room for growth. The key is choosing the right financing channels (BDC, Futurpreneur, CSBFP, etc.).
Want to know how much your business could qualify for?
Glow Pacifier Consulting has helped dozens of Toronto business owners successfully apply for government loans and grants.
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