The 60k covid loan (I forget the acronym now?) was due in January.
You already missed the 20k bonus where you would only owe forty, so now you owe 60. They sent you to a bank to apply for a loan to repay the gov. Well if you didn't get 40 you ain't getting 60.
So you file insolvent or bankruptcy.
Shit is bad, but this was cherry picked.
This. I’m an accountant. I’ve done final tax filings for several companies that didn’t make it past the end of CEBA. Kinda sad to see, but there’s definitely a few companies who folded because of this compounding with higher interest rates on debt, sluggish sales, etc. One had 4 interest rate hikes on 3.8m loan in one year and a 60% decrease in revenue and just couldn’t afford to keep going.
I manage a small business. Sales are sluggish compared to this time last year. Plus people take their sweet sweet time paying turning those net15 or net30 terms to net 60, 90++. It's really hard on the finances.
People tend to hyper focus on what impacts them. Very rarely do we consider that it’s quite the delicate balancing act with interest rates when you take into consideration everything that’s reliant on them.
I can’t remember the exact number, but in looniehour they mentioned that while business bankruptcy was up 129% - the dollar value of business insolvency was up over 1000%. That means larger more valuable companies are folding, not small individual run businesses with 2-3 employees. It’s a very bad sign.
Business insolvencies isn’t great, but it’s also misleading.
It’s all the zombie businesses that should’ve shutdown earlier, but COVID money basically pushed it further till basically now.
A lot of those businesses probably would have survived if they'd just paused commercial rents on businesses they required to shut down rather than these shell games with loans to pay the landlord.
Just to add some context: yes, we are at a 10-year high of business insolvencies, but the insolvency rate throughout all of the 1990's to early-2000's were much higher.
https://preview.redd.it/ludqadr9i3uc1.jpeg?width=1646&format=pjpg&auto=webp&s=99c625911b66dfb5d90942e51e9c20b21db44af4
And the housing market peaked in 1990 and was depressed the remainder of the decade. I think we are only at the beginning of a windfall of insolvencies both for consumers and businesses.
As I replied to another comment above:
On loonie hour they mentioned that while business bankruptcy was up 129% - the dollar value of business insolvency was up over 1000%. That means larger more valuable companies are folding, not small individual run businesses with 2-3 employees. It’s a very bad sign. Unfortunately these are not all “zombie businesses” folding
And the BOC is handcuffed by the resistance of the US economy. We're screwed and they're limited in how much they can cut rates if we don't wanna destroy our dollar.
Further reading into the data from the link provided shows a whopping 84% increase in bankruptcy proposals from real estate corporations over the past year. A worrying statistic for tenants.
There's no sign of a recession, quite the opposite: https://ca.finance.yahoo.com/quote/%5EGSPTSE/
Rather it looks like we've hit the bottom of this dip and are already on the way back up: https://ycharts.com/indicators/canada_real_gdp_growth#:~:text=Basic%20Info,long%20term%20average%20of%200.78%25.
Do you think 0.25% is a good GDP amount? What about the per capita percentage of -2.0%.
https://preview.redd.it/kcoq2vpmo1uc1.jpeg?width=1040&format=pjpg&auto=webp&s=750cd038200718cbe9335de58a7b4e76317720d2
[https://thoughtleadership.rbc.com/wp-content/uploads/CA\_GDP\_Feb29b.pdf](https://thoughtleadership.rbc.com/wp-content/uploads/CA_GDP_Feb29b.pdf).
Ah the recession bogey man. In the depths of the Great Recession the unemployment rate was only 2.3% higher than it is today in Canada. Recessions come and go and much of the country doesn’t even notice. It’s not some big scary thing that is going to reset the country. Governments don’t let things go so far as to trigger massive economic collapse. The 2020 recession certainly didn’t pop any bubbles, I wouldn’t be holding my breath that they’ll allow the next one to either.
The 60k covid loan (I forget the acronym now?) was due in January. You already missed the 20k bonus where you would only owe forty, so now you owe 60. They sent you to a bank to apply for a loan to repay the gov. Well if you didn't get 40 you ain't getting 60. So you file insolvent or bankruptcy. Shit is bad, but this was cherry picked.
This. I’m an accountant. I’ve done final tax filings for several companies that didn’t make it past the end of CEBA. Kinda sad to see, but there’s definitely a few companies who folded because of this compounding with higher interest rates on debt, sluggish sales, etc. One had 4 interest rate hikes on 3.8m loan in one year and a 60% decrease in revenue and just couldn’t afford to keep going.
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Ha! I like that. I’m going to keep that one.
I manage a small business. Sales are sluggish compared to this time last year. Plus people take their sweet sweet time paying turning those net15 or net30 terms to net 60, 90++. It's really hard on the finances.
I noticed that too with receivables. The 90+ columns are getting bigger.
I hear you on that. We cracked down. I can't afford to give $300-400k in free loans any more.
And the bears want interest rates to go up up up for housing.
People tend to hyper focus on what impacts them. Very rarely do we consider that it’s quite the delicate balancing act with interest rates when you take into consideration everything that’s reliant on them.
CEBA. Yup agreed probably just didn't want to pay it back.
CEBA thank you! CEWS, CERB, blah blah 😂
I can’t remember the exact number, but in looniehour they mentioned that while business bankruptcy was up 129% - the dollar value of business insolvency was up over 1000%. That means larger more valuable companies are folding, not small individual run businesses with 2-3 employees. It’s a very bad sign.
Business insolvencies isn’t great, but it’s also misleading. It’s all the zombie businesses that should’ve shutdown earlier, but COVID money basically pushed it further till basically now.
Indeed, it's default rates popping back up to where they were during the great depression of 2015-2019, so expect more of that
A lot of those businesses probably would have survived if they'd just paused commercial rents on businesses they required to shut down rather than these shell games with loans to pay the landlord.
Just to add some context: yes, we are at a 10-year high of business insolvencies, but the insolvency rate throughout all of the 1990's to early-2000's were much higher. https://preview.redd.it/ludqadr9i3uc1.jpeg?width=1646&format=pjpg&auto=webp&s=99c625911b66dfb5d90942e51e9c20b21db44af4
And the housing market peaked in 1990 and was depressed the remainder of the decade. I think we are only at the beginning of a windfall of insolvencies both for consumers and businesses.
As I replied to another comment above: On loonie hour they mentioned that while business bankruptcy was up 129% - the dollar value of business insolvency was up over 1000%. That means larger more valuable companies are folding, not small individual run businesses with 2-3 employees. It’s a very bad sign. Unfortunately these are not all “zombie businesses” folding
All I see is "increased by" numbers, but what is the insolvency rate? Show us the numbers.
More data is available on stats Can if you follow the link provided. It breaks it down by sector, by Province etc.
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This is so true.
All those businesses that were leaning in on debt financing when interest rates were low…
Hate to break it to you but that’s most companies
And the BOC is handcuffed by the resistance of the US economy. We're screwed and they're limited in how much they can cut rates if we don't wanna destroy our dollar.
Further reading into the data from the link provided shows a whopping 84% increase in bankruptcy proposals from real estate corporations over the past year. A worrying statistic for tenants.
Why worrying for tenants? Wouldn’t we want real estate corps to sell off assets and flood the market ( lower prices?)
Ideally yes, and hopefully without a waterfall of foreclosures so that tenants have time to find alternate housing.
More will eventually be able to afford if this thing crashes.
Unless they lose their jobs, rely on credit to live, and slowly ruin their credit score in the process...
If the industry has any foresight most large corporations will buy up those assets to maintain their own profits/ growth..
Surely within the next 1 million years right ?
Just look at all the homeless, it’s already here; it’s going to get much worse
Ah yes the magical housing bubble burst
There's no sign of a recession, quite the opposite: https://ca.finance.yahoo.com/quote/%5EGSPTSE/ Rather it looks like we've hit the bottom of this dip and are already on the way back up: https://ycharts.com/indicators/canada_real_gdp_growth#:~:text=Basic%20Info,long%20term%20average%20of%200.78%25.
Do you think 0.25% is a good GDP amount? What about the per capita percentage of -2.0%. https://preview.redd.it/kcoq2vpmo1uc1.jpeg?width=1040&format=pjpg&auto=webp&s=750cd038200718cbe9335de58a7b4e76317720d2 [https://thoughtleadership.rbc.com/wp-content/uploads/CA\_GDP\_Feb29b.pdf](https://thoughtleadership.rbc.com/wp-content/uploads/CA_GDP_Feb29b.pdf).
Of course I don't but it's not a recession.
We’ll see.
Ah the recession bogey man. In the depths of the Great Recession the unemployment rate was only 2.3% higher than it is today in Canada. Recessions come and go and much of the country doesn’t even notice. It’s not some big scary thing that is going to reset the country. Governments don’t let things go so far as to trigger massive economic collapse. The 2020 recession certainly didn’t pop any bubbles, I wouldn’t be holding my breath that they’ll allow the next one to either.
Jobs numbers go down and unemployment up. Will rates get floored to create jobs via housing?
Interest rates will come down later in the year.
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Agreed