Struggling Toronto businesses need more time to repay federal pandemic loans, association says

A Toronto business organization is calling on the federal government to give small businesses more time to repay emergency pandemic loans.

Business owners are dealing with a high level of stress and anxiety as the deadline looms to repay the Canada Emergency Business Account (CEBA) loans, according to Philip Kocev, treasurer of the Broadview Danforth BIA, which represents more than 350 businesses on Danforth and Broadview avenues. The repayment deadline is Dec. 31, 2023. 

Many businesses took on "substantial" amounts of debt over the last three years, he said. Even if their income is inching closer to pre-pandemic levels, the businesses still have to make up for three years of losses, let alone repay the loan from the federal government, he said.

"That December deadline does feel, for many businesses, like an arduous ask," Kocev told CBC Toronto on Tuesday. "They are not getting enough revenue to pay back the debt."

Businesses that repay their CEBA loans by Dec. 31, 2023 will be eligible to have up to $20,000 forgiven, but businesses that do not meet the deadline will have to repay their entire loan amount with interest, which will be calculated beginning on Jan. 1, 2024.

According to the federal government, CEBA loans are interest-free until December 31, 2023.

After that date, the remaining loan amount will automatically convert to a two-year term loan with interest of five per cent per annum. The government says the loans are fully due by Dec. 31, 2025.

The BIA, in a news release on Tuesday, asked the government to do the following:

• Create a multi-year no interest repayment plan that would begin this December and continue for the next two to three years.
• Consider a blanket forgiveness plan for the $20,000 portion if businesses begin a multi-year repayment plan this December. It says such a plan would be an investment by the government in the small business sector and "a very tangible show of support for the rebuilding of businesses' financial security during this post-COVID recovery period."

Extension would 'really, really help,' owner says

Zach Davidson, owner of The Meat Department, a butcher shop on the Danforth, said his business still hasn't recovered fully from the pandemic.

"We're hanging in there. If we were able to get them to make an adjustment to this, it would really, really help, because for us, it's really tight right now because inflation is everywhere," he said.

"None of the businesses I've spoken to are anywhere near their pre-pandemic sales levels. They're just paying the bills right now and not much more."

Davidson took out a $60,000 CEBA loan. To have $20,000 of that loan forgiven, he has to pay $40,000 back by the end of the year.

"Having to take on more debt to pay it back, that's not helping any business at this point."

Deadline extended once already, government says

Adrienne Vaupshas, press secretary for Federal Finance Minister Chrystia Freeland, said the government already granted an extension of the deadline last year from Dec. 31, 2022, to Dec. 31, 2023.

"During the pandemic, our government put in place unprecedented measures to support Canada's small businesses. That was the right thing to do, and it helped keep restaurants and other small businesses afloat – in Toronto and right across the country," she said.

"Last year, for eligible loan holders in good standing, we announced that the repayment deadline to qualify for partial loan forgiveness was extended by one year, to Dec. 31, 2023. This was intended to support hard-working business owners as they continue to recover from the pandemic," she continued.

As part of its most recent budget, the federal government also secured commitments from Visa and Mastercard to lower credit card transaction fees for small businesses, Vaupshas added. 

The CEBA was introduced at the height of the pandemic to help out small businesses forced to close or limit their operations due to public health measures. The program offered interest-free loans backed by the federal government. Nearly 900,000 businesses were approved for the program, which distributed just under $50 billion in loans.