Intuit QuickBooks’ Small Business Index Annual Report reveals a stark decline in Canada’s small business employment—84,100 jobs lost since July 2024, with manufacturing hit hardest at 28,100 jobs lost.
Key findings include:
- High-cost financing reliance: Credit cards are now the #1 financing tool for Canadian small businesses, posing long-term risks.
- Regional and sector trends: Ontario led with job gains, while Quebec saw the steepest losses. Manufacturing and professional services saw significant declines.
- Women-led innovation: Women-owned small businesses are leading in digital transformation, driving faster growth and higher confidence.
Developed in collaboration with leading global economist Professor Ufuk Akcigit and his co-authors, the report reveals that while overall employment has grown year-over-year, small business growth is lagging, hindered by high interest rates making it harder for some to access financing to fuel growth. Small businesses that were hardest hit by this had up to 30 per cent lower revenue growth and up to four per cent lower employment growth than other small businesses.
“Rising borrowing costs and limited access to financing are taking a toll on the health of small businesses, contributing to declining employment,” said Akcigit, leading global economist and Arnold C. Harberger Professor of Economics at the University of Chicago. “Our research reveals that banks slowed by high interest rates also extended less credit to their small business customers. This reduction has stunted the growth of these businesses, underscoring the critical connection between affordable credit access and small business success across the country.”
The second Small Business Index Annual Report also highlights:
The Credit Card Trend:
Due to their accessibility, flexibility, and ability to address immediate financial needs, credit cards are a vital source of financing for small businesses. In fact, they are currently the number one source of financing for small businesses in Canada. In North America, more than 1 in 10 reported using credit cards for more than 75 per cent of monthly expenses. When asked about the proportion of expenses charged to credit cards, 57 per cent of Canadian small businesses are charging more than 25 per cent of their total monthly business expenses to credit cards. While small businesses with access to greater credit from banks have experienced faster short-term growth, the reliance on credit cards poses longer term risks by driving up the cost of growth and debt repayments.
Navigating Uneven Growth:
Over the 12 months, small business employment across Canada reflected uneven growth. Canadian small business employment grew by 126,600 jobs, but the pace of growth slowed during the summer of 2024. Despite this overall increase, five sectors, including manufacturing and professional services, experienced annual declines. The professional services sector (NAICS 54) lost 20,000 jobs over the same period, an annual decline of 4.23%, leaving 462,700 employees at small businesses. This was the fastest year-over-year decrease since 2015. Regionally, Ontario led the country with 126,700 new small business jobs, while Quebec faced the steepest decline, losing 27,100 jobs. These trends underscore the importance of providing targeted support to tackle regional and sector specific challenges within the small business landscape.
Tech-Savvy Women Entrepreneurs:
Small businesses that embrace digital transformation are outpacing their peers in growth, and women-owned businesses are leading this charge. Canadian women-owned small businesses are among the most digitally integrated, leveraging technology to drive higher productivity, accelerate revenue growth, and boost confidence in their operations. This trend highlights the critical role digital tools play in shaping the success and resilience of small businesses, particularly those led by women, who are setting the example of innovation and leadership in the evolving business landscape.
“Small businesses play a key role in the health of the Canadian economy,” says Simon Worsfold, Head of Data Communications at Intuit QuickBooks. “This is why it’s so important for them to have access to a wide range of financing options. This can boost revenue and create jobs. While rising costs and the risks associated with credit card debt remain a concern, there are solutions.”
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