A sign on a small business welcomes shoppers to return the next day, in Ottawa, on May 18, 2020.Justin Tang/The Canadian Press
More than 250 business associations are calling on the federal government to extend the repayment deadline for Canada Emergency Business Account loans.
CEBA was the first and most widely used support for businesses in the early months of the COVID-19 pandemic. Ottawa extended loans of $40,000 or $60,000 to nearly 900,000 businesses, for a total of $49-billion in credit. Only about a fifth of the loans were repaid as of this past March 31.
Businesses that repay their loans by Dec. 31 will have either $10,000 or $20,000 forgiven, depending on the size of the loan. As of next Jan. 1, no amount will be forgiven, and interest will begin to accrue at the rate of 5 per cent.
A coalition of 256 groups, led by the Canadian Chamber of Commerce, the Canadian Federation of Independent Business, Restaurants Canada and the Tourism Industry Association of Canada, wrote to Finance Minister Chrystia Freeland on Monday to ask the government to extend that first repayment deadline by two years, to Dec. 31, 2025.
The groups argue that small business owners continue to face financial challenges, such as inflation and high interest payments on other debt they took on during lockdowns.
“With each passing day, entrepreneurs who collectively maintain a very considerable work force face increasingly daunting financial pressure,” the letter said.
The signatories include chambers of commerce and boards of trade from communities across Canada, as well as a number of groups representing specific industries.
Ms. Freeland’s office said CEBA did its job in helping businesses weather the early months of COVID. “This program was central to ensuring Canadian small businesses were able to not only survive the pandemic but thrive in the recovery,” spokesperson Katherine Cuplinskas said in an e-mail.
“We are very aware of the concerns expressed in today’s letter and we remain in contact with a number of these organizations.”
Some lenders offer to refinance CEBA pandemic loans as Ottawa’s repayment deadline looms
Kelly Higginson, president of Restaurants Canada, said food services businesses are still struggling to reach profitability because of increased costs and staffing difficulties.
She pointed to data from Statistics Canada that businesses in the sector were closing at faster rates than before and fewer were opening. The agency reported that 2,026 businesses in accommodations and food services opened in March, compared with 2,516 that closed. Federal data showed there were 593 insolvencies in the sector in the 12 months ended March 31, the most of any industry.
Ms. Higginson said she keeps hearing from restaurant owners who feel ready to throw in the towel and regret holding on as long as they have. “I keep hearing the same line, ‘If I had only known I would never have taken out the first loan or the second line of credit or kept going for another six months,’” she said.
Beth Potter, president of the tourism association, said her industry is hoping to see domestic travel return to 2019 levels within the next 12 months, but international travelling is still below prepandemic levels. That’s meant a few years of lost revenue that is very hard for businesses to make up.
“Once you miss a day at an amusement park, or a day in a hotel or a bed and breakfast, you can’t resell it,” she said. “You can’t sell two the next day and make it up. So a lot of these businesses, while travel is back, are still challenged with debt they incurred during the pandemic.”
Nanos Research surveyed tourism businesses in April and May on behalf of the association and found that 55 per cent were not confident or somewhat not confident that they could make their debt payments over the next two years.
A Statistics Canada study published in January found CEBA was the government pandemic program used by the most businesses, and that the majority were small and medium-sized businesses.
The research found that, per capita, large firms received far more government support than smaller ones; for example, one million small businesses received a total of $109-billion in aid, half of which were loans, while 3,515 large businesses received a total of $33-billion, mostly from the federal wage subsidy.
A separate study published in March found CEBA recipients were most likely to operate in industries that were most affected by lockdowns, such as food services and tourism.
Businesses in those industries are also more likely to be owned by women or racialized entrepreneurs. A separate group of businesses wrote to the government last week arguing that those demographic factors should encourage the government to extend the CEBA repayment deadline.