Tuesday, October 21, 2025

Small Business Recovery Stalls with 2024 Insolvencies at 15-Year High

A new Innovation, Science and Economic Development Canada research paper finds retail startups are down about 21% from pre-pandemic levels, underscoring how COVID-era disruptions continue to suppress firm formation.

That startup shortfall is mirrored by insolvency data. In 2024, total insolvencies in Canada rose 12.1% year over year, according to the Office of the Superintendent of Bankruptcy. Industry tallies describe 2024 as a 15-year high for consumer and business filings—near Great Recession peaks.

Of the data, the Canadian Association of Insolvency and Restructuring Professionals reports 6,188 business insolvency filings in 2024, up 28.6% from 2023—also the highest count in 15 years—with construction, transportation/warehousing, and accommodation/food services leading the increases. Earlier, in Q1 2024, business insolvencies spiked 87.2% from the same quarter a year prior—the steepest jump in the OSB’s 37-year record.

Meanwhile, the pipeline of new businesses has been thin. StatCan’s monthly openings/closures data show 2023 as an unusual year when the average opening rate of 4.6% matched the average closure rate, leaving the number of active businesses drifting lower in many months.

StatCan also finds that pandemic-era entrants tended to carry less debt, had more liquidity, and posted stronger productivity at entry than prior cohorts. Better balance sheets help survival, but fewer new firms—particularly in retail—still means a thinner growth base.

Supporting this, the Bank of Canada’s 2025 Financial Stability Report highlights ongoing vulnerabilities among indebted households and businesses amid trade uncertainty and tighter credit. That backdrop typically suppresses firm formation and keeps marginal operators fragile.


Information for this story was found via the Blacklock’s Reporter and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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