Sat. Feb 24th, 2024

CUEC Loans: anxiety ; and confusion near a deadline

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According to the Canadian Federation of Independent Business, nearly 20% of SMEs in the country are at risk of going bankrupt due to the refusal to Ottawa to postpone the repayment date for emergency loans granted during the pandemic. (Archive image)

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The federal government shows no sign that it will again ease the repayment conditions of emergency loans granted to businesses affected by health measures at the height of the pandemic, despite repeated requests from elected officials and groups that defend the interests of entrepreneurs.

As a major deadline approaches, some companies are still trying to sort out their options for repaying the government, while others face surprises.

Nearly 900,000 businesses have benefited from the Canadian Emergency Business Account (CEBA). Their owners have only three days left – that is to say until January 18 – to repay their loan worth up to $60,000 if they wish. part of this loan is exempt.

These entrepreneurs can also attempt to refinance their loan and repay the government before the end of March to maintain the right to partial forgiveness.

According to the Canadian Federation of Independent Business (CFIB), the federal government has been slow to clarify the terms of repayment of CEBA loans with a total value of more than $49 billion. Some SMEs have thus received contradictory information from Ottawa and their financial institutions in recent weeks.

LoadingGender marker :group-hover-focus:text-rosso300 !font-display text-4 leading-5 font-bold”>Gender marker INFO: Gender marker X: the government prevents the SAAQ from adapting driving licensesThe first thing you hear is confusion, summarizes Christina Santini, director of national affairs for the CFIB, an organization that represents nearly 100,000 SMEs across the country.

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CFIB's director of national affairs, Christina Santini, indicates that many entrepreneurs are struggling to understand the different repayment options for emergency loans granted during the pandemic.

Ania Jamila is one of those entrepreneurs for whom repaying the CUEC loan causes a lot of headaches.

During the pandemic, the activities of his audiovisual production company were completely shut down. The $40,000 she gets through CUEC allows her to stay afloat and relaunch her business when health measures ease.

We felt supported. We felt supported by the government in a somewhat complicated situation, she explains.

The loan allows him to orchestrate a shift towards film production. After two years of hard work, she signed a few important contracts which gave her a little room to maneuver.

With the cash, she repaid last December the $30,000 she believes she owes the government.

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The loan from the CUEC program allowed Ania Jamila to breathe new life into his audiovisual production company.

I was very proud to repay [the loan] before the deadline [of January 18]. Paying it off at the beginning of December, I felt liberated. I felt accomplished, she says with emotion.

These feelings gave way to incomprehension when at the beginning of January, she read an email from her bank which escaped him a few weeks ago.

She is informed that she has been deemed ineligible for the government program. Her financial institution is asking her for the $10,000 she thought was exempt before December 31. Her bank explains to her that it is not responsible for the decision and redirects her to a call center set up by Ottawa.

An automated message tells her while decisions regarding loan eligibility are final and there are no appeals.

I feel duped. I feel stunned. I don't understand what's going on, […] even though I thought I did things correctly, confides Ms. Jamila.

To this day, she still does not know why she was not deemed eligible for the program. However, she intends to repay the $10,000 as soon as possible in order to move on.

I can access this amount, but I know that not everyone will be able to access it. This is what saddens me the most, laments the entrepreneur.

According to the federal government, 50,000 businesses that have obtained a CUEC loan were subsequently deemed ineligible for the program.

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Despite pressure from several groups, the Deputy Prime Minister and Minister of Finance, Chrystia Freeland, has given no sign that she will delay repayment of CEBA loans. (Archive photo)

By email, a press secretary for Deputy Prime Minister and Minister of Finance, Chrystia Freeland, indicates that in 2021, small business owners with a demand incomplete or ineligible have been contacted several times by their financial institutions.

Ms. Jamila claims to have only received emails at the time informing her that her request to increase her CUEC loan by $20,000 had been refused.

In addition to the confusion surrounding reimbursement conditions, CFIB reports a lot of anxiety among its members.

It's really not easy for many [entrepreneurs] to repay these sums in the current economic context, explains Ms. Santini.

According to CFIB, a third of its members do not think they will be able to refinance or repay their loan before January 18.

They will have to start making payments 5% annual interest on amounts borrowed.

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According to the CFIB, a third of its members have already repaid the CEBA loan and another third believe they will be able to refinance it to benefit from partial exemption. (File photo)

These entrepreneurs are therefore forced to review their budget to find additional money to pay interest and repay their loan before the final deadline in December 2026.

Many of them will have to close shop, warns Ms. Santini.

For several months, the CFIB has been insisting that 250,000 businesses, or 19% of Canadian SMEs are at risk of going bankrupt due to Ottawa's refusal to postpone the repayment date for CEBA loans.

Restaurants Canada estimates that one in five restaurateurs who have benefited from the program are on the verge of closing one or more of their establishments, or more than 4,000 independent restaurants .

Given these alarming figures, many chambers of commerce, the 13 provincial and territorial premiers, the NDP and the Bloc Québécois, among others, have joined the fight to encourage the Trudeau government to once again postpone loan repayments. Until now, their efforts have been in vain.

Despite the difficulties it may generate for certain SMEs, the federal government's decision not to Bending in the face of pressure from these groups is justified, according to Geneviève Tellier, professor of political studies at the University of Ottawa.

The question that arises is: is the government not helping companies which ultimately, under normal conditions, would not have survived?, evokes -she.

There will always be companies in difficulty, but our system means that we accept that a good part of these companies disappear because they are not profitable and they no longer respond to a need of society, adds the political scientist

Year after year, more than 90,000 businesses cease their activities each year in the country, according to data from Statistics Canada collected between 2013 and 2017.

Ms. Tellier also recalls that consumer habits have changed since the pandemic.

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Geneviève Tellier is a professor of political studies at the University of Ottawa. (Stock image)

Companies that have managed to make the shift or offer the new product that is in demand will succeed. But should we continue to support a [business] model that should no longer exist?, she asks.

Déborah Cherenfant, strategist in women's entrepreneurship, adds that the precariousness of many SMEs is due to a cocktail of factors.

Is [the CEBA reimbursement] the straw that broke the camel’s back? Perhaps, in certain cases, she indicates.

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Déborah Cherenfant believes that repaying CEBA loans is one of the many challenges that entrepreneurs must currently face. (Archive image)

But I wouldn't say that this is the main factor in this fear that we feel among entrepreneurs , shade Mme Cherenfant.

In his eyes, inflation, labor shortages in certain sectors, rising borrowing costs and the stagnation of economic activity in the country represent more glaring challenges that are not likely to disappear. soon.

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However, she considers it deplorable that some businesses only recently learned that they were not eligible for the CEBA program, while others are still having difficulty sorting out the different reimbursement conditions.

Such communication challenges are common in programs offered to SMEs, according to Ms. Cherenfant.

One of the points that comes up very often, and not only at the federal level, but also at the provincial and municipal level, is that the administrative part is less clear. There are several steps. Often, we feel faced with a labyrinth, she notes.

In this sense, Ms. Jamila, the entrepreneur whose bank demands the money she thought was exempt, maintains that her experience with the CUEC loan made her lose confidence in government programs.

I was promised something that didn't come to fruition and I have no way of knowing why, she laments.

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