A major deadline is looming for small business owners to repay pandemic loans but some say they need more time or else they could end up closing for good.
“We’re not asking for a hand out, we are not asking for money; we are asking for time,” said Rod Castro, owner of 10 Fourteen and Pubblico Eatery.
Like many small business owners, Castro took advantage of the federal government’s Canada Emergency Business Account (CEBA) loan when he was forced to close his doors because of the pandemic.
But come Thursday, it will be time to pay back the $60,000 interest-free loan.
“We’re playing Tetris — that’s the best way to put it — trying to figure out what is our best option,” said Castro.
Any business that is able to pay in full by the deadline will see $20,000 of the loan forgiven.
Those who cannot will owe the full amount plus five per cent interest by the end of 2026.
There is another option; business owners have until the end of March to take out another loan at a higher interest rate and still qualify for the forgivable portion.
“My life savings are gone, my retirement savings are gone, the amount of expenses small businesses have had to incur in 2023 have killed all profitability to small businesses,” said Castro.
Around 900,000 businesses across the country took advantage of the loan, but the Canadian Federation of Independent Business (CFIB) says about a quarter of those will not be able to meet the deadline and, instead, run the risk of having to close altogether.
“The impact on Canada’s economy, on the job market, on tax revenue would be enormous,” said CFIB president Dan Kelly. “That’s why we feel the government is making a mistake by not giving small businesses a bit more time to repay.”
The CFIB has been calling on the government to extend the deadline another year.
In a statement, the Finance Minister’s office told CTV News, “The additional flexibility we announced is significant support for small businesses who might still be struggling to make ends meet.”
But not everyone qualifies for more loans.
“My bank specifically has this stance — if you’re not in a position to repay the CEBA loan, you’re not a strong candidate to repay one of their loans,” said owner of All Eco, Jackie Morphy.
With the clock ticking, business owners like Morphy say it’s just a matter of time before closing for good.
“Now I’m one of those businesses who has no choice but to consider it,” she said.
As of August, the government says one fifth of businesses have repaid the loan.
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