For entrepreneurs like Karla Briones, owning a small business has only been getting harder.
She’s owned two Global Pet Foods franchises in the Ottawa area for more than a decade, but says costs are now rapidly rising, shrinking her margins and making it more difficult to compete with low-cost online retailers.
Her distributors have also passed on some tariff-related costs, forcing her to raise prices on store shelves.
“There are rising costs in absolutely everything. Commercial rent, employment, our inventory — everything is rising, but we’re trying to stay competitive,” Briones said.
Briones isn’t the only one struggling. Many small and medium-sized employers country-wide — which employ more than 60 per cent of the private-sector workforce in Canada — have faced challenges from tariffs and slowing consumer spending, according to Jasmin Guénette, vice-president of federal affairs with the Canadian Federation of Independent Business (CFIB).
“Canada is facing an entrepreneurial drought, meaning that at the moment, more small businesses are closing than opening in this country.”
Ahead of Thursday’s federal budget, Finance Minister François-Philippe Champagne foreshadowed to an audience at the Canadian Club in Toronto on Monday that small businesses would “see themselves” reflected in the government’s financial plan.
That would be welcome news for many business owners and the groups that represent them, who are hopeful the 2026 budget might include improved tax measures and programs that can support them through punishing tariffs.
WATCH | How Canadian counter-tariffs could kill some small businesses:
How Canadian counter-tariffs could kill some small businesses
As Canada’s counter-tariffs on U.S. products come into effect, some small-business owners say that while they understand the urge to fight, they’ll take a major blow from these levies. For The National, CBC’s Nick Purdon hears from business owners trying to survive more tariffs, which one advocate calls ‘economic chemotherapy.’
Less taxes for small businesses top of CFIB’s list
Topping the CFIB’s wish list for the budget are tax changes that would bring down the cost of doing business.
The federal tax rate for small businesses currently sits at around nine per cent, which the lobby group wants reduced to six per cent.
It said it would also like to see the small business income threshold — which allows businesses to pay that lower tax rate on a portion of their earnings, before being taxed at a higher 15 per cent rate — raised from $500,000 to $700,000.
Guénette says such a move would have the broadest impact on small and medium-sized business owners across all sectors, who told the CFIB they would use the tax savings to reinvest in their operations.
Karla Briones rearranges cans of pet food on a shelf at one of the Global Pet Food franchises she owns in the Ottawa area. Briones is hopeful the budget will help business owners like her following comments earlier this week by Canada’s finance minister. (Marc Robichaud/CBC)
That could include measures like new training opportunities and higher compensation for employees, as well as new equipment and machinery, he says.
The finance minister signalled on Monday that changes aimed at simplifying taxes could be coming.
Briones says any such move would free up time for her to focus on other areas of her business, while the CFIB’s ask would also be a much-needed boost.
But even better, she says, would be a cut to employment insurance premiums for small businesses, allowing employers to pay the same EI premium rates as their employees (something the CFIB is also calling for), as that would immediately put more money in her pocket.
“That would be incredibly useful for us on a payroll-by-payroll basis, as opposed to waiting until … we file our taxes to get credits or to get other types of support,” Briones said.
That flow of cash has been one of the biggest hurdles for Briones, and one of the reasons why she hasn’t yet jumped to use the government’s productivity mega-deduction, a measure announced in September that allows businesses to expense the total value of many kinds of investments, including things like equipment.
WATCH | Carney announces productivity mega-deduction at Investment Summit:
Carney woos investors to Canada with massive tax break
Prime Minister Mark Carney announced a massive tax break to attract investors to Canada. It includes the productivity mega-deduction which lets companies immediately write off the entire cost of new investments.
Those investments can be expensed immediately, but Briones says she would still need the upfront cash to pay for a new freezer or point-of-sale system before she gets the money back, which isn’t always easy. She says an interest-free lending program to help businesses of all kinds make those investments is on her wish list.
But Eric Saumure, an Ottawa-based small business finance expert and accountant with Zenbooks, says he isn’t holding his breath. In a pre-budget blog post, he wrote the mega-deduction and already-announced tariff relief measures will likely leave little room in the budget for more spending for businesses.
“Put those together and my read is that Ottawa has already made its big business tax move for the year.”
More tariff relief, help accessing new markets
With the latest round of 50 per cent U.S. tariffs hitting small and medium-sized businesses in particular, many are also hoping the budget brings further trade war relief.
The CFIB has said some 46 per cent of small exporters are directly impacted by the U.S. levies, while 49 per cent of small importers are impacted by Canada’s counter-tariffs.
Amit Thakkar says his Brampton, Ont.-based fabric and apparel companies, House of Blanks and Roopa Knitting Mills, have both taken a hit due to 50 per cent U.S. tariffs on clothing.
He applauded existing tariff measures like the regional tariff response initiative, which gives eligible companies impacted by the levies up to $3 million overall. But Thakkar says some of those programs are limited in the kind of costs they cover.
They also require businesses to apply for them and prove their eligibility, which Saumure also says is an obstacle. In a pre-budget submission, Zenbooks suggested the government give automatic tariff relief payments to impacted businesses to reduce that barrier.
Amit Thakkar is the president of Roopa Knitting Mills and House of Blanks, which make apparel and fabric in Brampton, Ont. Some clothing items were hit with 50 per cent tariffs by the U.S., and Thakkar says he’d like to see more relief measures in this Thursday’s budget. (Spencer Gallichan-Lowe/CBC)
In the budget, Thakkar would like to see revenue from counter-tariffs given directly back to the small businesses impacted by them — similar to another measure the CFIB has called on the government to implement.
But beyond that, he says businesses still need to have a customer once they’ve received support.
“We’ve got to make sure there’s a customer at the end of the tunnel,” he said. “It’s all in vain if there’s no sales to attribute to it.”
He says more help to pivot to new markets would be nice to see in the budget. The main obstacle keeping him from shipping to Europe, for example, is the high cost, so he says subsidies to help Canadian companies ship products overseas could help business owners like himself find new markets.