A lot of press focused on the housing market in 2021, interest rates, inflation, inventory, buyer demand; these are all topics that are hot news items. The federal election of 2021 brought even more attention to the current housing situation in Canada.
But what about small business owners? How will the government’s latest policy changes impact them?
Let’s take a closer look at how new government changes will impact business owners in 2022.
Immigration Targets are Getting Ramped Up
Canada is currently in the midst of a labour shortage. Simply put, there aren’t enough Canadians to fill available jobs. Canada’s Immigration Minister has recently said that he plans to ramp up immigration in 2022.
Last year’s immigration targets exceeded the forecasted 401,000 new permanent resident statuses. 2022 promises an even greater number of new Canadians entering the country.
Immigration Minister, Sean Fraser says he plans to increase targets for 2022 to 411,000 new permanent residents and is even prepared to increase that number if needed.
As a result, Canadian business owners should feel some relief from the current labour shortage, although such high immigration numbers will put further pressure on the already-tenuous housing market.
Interest Rates Are Probably Going Up
If you currently have a mortgage, you are probably aware that the benchmark interest rate set by the Bank of Canada is set to increase at least 3-5 times over the next year. Expert economists predict the earliest spike to happen as early as the end of Q1.
While this will have an impact on both residential and commercial mortgage holders, it will also impact businesses, as the benchmark interest rate is also closely tied to inflation.
When interest rates go up, business owners will also experience increased expenses that often come directly from their profits.
Residential and commercial real estate are two completely different animals. Check out some of the main differences in these helpful posts:
- What’s the Difference Between Residential and Commercial Real Estate Transactions?
- Here’s Why You Should Sell Your Restaurant with a Realtor®
Keep an Eye on the Canadian Dollar
Many analysts are predicting that the Canadian Dollar will reach new heights in 2022, which is good news for businesses that buy goods from the US. However, alternatively, if the Dollar does take a dip, it usually is followed by an increase in local support from consumers.
Consumers who might typically purchase goods from the US could think twice about spending more with a weak Dollar, and in turn, rely more on local businesses to take advantage of the cost savings.
So either way, Canadian businesses are able to reap some benefits from both situations.
What Does the Liberal Party’s Election Platform Say About Small Businesses?
The federal election was certainly a highlight for both residential homeowners and business owners in 2021. No matter which party you supported, it’s easy to pick and choose fine platform promises from all the major players.
However, since the Liberal Party was once again elected, let’s take a closer look at what their platform promised for small businesses. A few of the key items in their election platform included:
- Increasing the max loan amount from $350,000 to $500,000
- Increasing extended lending coverage from 10 to 15 years for equipment and lease improvements
- Introducing a new type of line of credit with benefits specifically targeted towards businesses
- Expanding borrower eligibility, including non-profits and charitable organizations
- Expanding loan class eligibility to include borrowing against intellectual property and start-up assets
Whether these platform promises will come to fruition, only time will tell. But if they do, these could be a major gamechanger for small businesses in Canada.
Thinking about opening a restaurant? Check out these resources:
- 10 Places to Open an Eatery in Ontario (Besides Toronto)
- Should You Buy or Lease Your Next Restaurant
- Is Now the Right Time to Invest in a Restaurant Business?
- 4 Ways to Prepare for a Restaurant Purchase
There’s a Light at the End of the Pandemic Tunnel
The past two years have seen some of the most challenging conditions for small businesses to thrive in Canada. Although we have experienced frequent lockdowns, travel restrictions, and the economic outfall of the COVID-19 pandemic, it would seem like things are finally returning to normal–or at least, we can eventually see things getting back to normal. There is a light at the end of the tunnel!
With vaccination rates on the rise and many consumers eager to return to their old lifestyle, the economy is moving forward in its recovery plan. Additionally, there is a renewed interest from the public in “supporting local” as many people have noticed and empathized with the struggles of small business owners in their communities. Businesses have also learned from the past, becoming more agile and having better resources to ride out potential disruptions such as future lockdowns.
Whether you are currently a small business owner or you’re thinking about becoming one in 2022, it’s important to have a good understanding of the social and economic happenings that can impact your business.
Are you thinking about taking the first step toward buying a restaurant? Download our Ultimate Guide to Buying a Restaurant right here.
