'Completely unrealistic' deadline extension on pandemic business loan 'an insult,' Manitoba restaurateur says
Some businesses say they're not sure how they will stay open as deadline for CEBA repayment approaches
With deadlines approaching for business owners to repay a federal government-backed pandemic loan, some Manitoba businesses are questioning their ability to stay open.
The Canada emergency business account (CEBA) launched in April 2020 to help Canadian small businesses during the COVID-19 pandemic.
Businesses were offered zero-interest loans of up to $60,000 through the program. Up to $20,000 would be forgiven if the rest was repaid by a certain date.
In September, the government granted an extension to that deadline, moving it from Dec. 31 to Jan. 18, 2024. If businesses make a refinancing application before Jan. 18 with the financial institution that provided their CEBA loan, the deadline moves to March 28.
But "that extension was ridiculous," said David MacKay, the director of operations and managing partner at Little Bones Wings in Winnipeg.
"It was an insult, a slap in the face and completely unrealistic. Whoever thought that would be appropriate clearly doesn't understand the hospitality sector," he said.
"We very possibly could go out of business."
Nearly 900,000 businesses were approved for the program, which distributed just under $49 billion in loans. In Manitoba, 23,424 businesses received loans, totalling nearly $1.3 billion, according to the program's website.
As of Jan. 19, any outstanding loans, including those receiving the refinancing extension, will be subject to interest and must be repaid in full by Dec. 31, 2026 — a deadline that was originally set for the end of 2025.
A spokesperson for the federal government says the extensions offer "additional flexibility" that provide "significant support for small businesses who might still be struggling to make ends meet."
"The bottom line is that, if you are a small business and do not currently have the funds to repay your CEBA loan, you now have three years to repay it in full," wrote Katherine Cuplinskas, a senior communications advisor and press secretary to Finance Minister Chrystia Freeland, in an email.
But Brianna Solberg, the Canadian Federation of Independent Business director for Manitoba, Saskatchewan and the North, says many Manitoba businesses are not satisfied with the changes.
"An overwhelming majority — 80 per cent of small businesses — did not find these changes helpful because it misses the most important piece, which is business owners aren't able to meet that deadline on Jan. 18," she said.
Bank loans not an option
Little Bones' MacKay is among the business owners now facing that January deadline.
"The only way we're going to be able to meet it is if we get financing for it, which is proving to be challenging, because the banks — at least our bank … is not ready to even discuss or facilitate a loan for us," he said.
"The conditions that have occurred after the pandemic were far worse than the pandemic itself. So to call the loan in during a period of economic crisis is absolutely ridiculous."
This frustration is echoed by Judy Weselowski, the manager of Book Fair Comics in Winnipeg. Her Portage Avenue business is struggling to come up with the $40,000 by January, and turning to the bank for support is not an option.
"What they had said was, '[the government] extended it by two weeks.' Well, that doesn't do us anything," she said.
The expectation was that businesses could go to their lenders to try to get a loan to make the $40,000 repayment, she said, "and then you can get your forgivable part."
"Well, if we didn't qualify for … [a bank loan] the first time around, we aren't going to qualify for that this time around," she said.
Weselowski says covering the $40,000 by January through options like credit cards or financing would result in fees or interest payments that nearly equal the $20,000 forgivable amount.
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Following the government's September announcement about the deadline extension, a vast majority of small businesses said an extension of the forgivable deadline to the end of 2024 would be beneficial, according to the CFIB's Solberg. Only about a third said they expected to be able to repay their CEBA loan by Jan. 18.
The Canadian Federation of Independent Business wants the forgivable portion of the loan increased to 50 per cent, and to see the deadline extended.
In an Oct. 20 letter to Prime Minister Justin Trudeau, all 13 provincial and territorial premiers asked Ottawa to extend the Jan. 18 deadline by a year.
"The same loan that was once a lifeline during the pandemic is now threatening to sink the small businesses that are only just getting by," the letter reads.
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