Sun. Mar 3rd, 2024

CEBA loan repayment: 'I can't believe I'm going to have to close'

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Entrepreneurs have until January 18 to repay the loan offered by the Canadian Emergency Business Account. (Archive photo)

Radio-Canada

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Tens of thousands of entrepreneurs fear they will not be able to repay a loan of several thousand dollars taken out from the federal government during the pandemic, and whose maturity is fast approaching.

Created during the COVID-19 pandemic, the Canadian Emergency Business Account (CEBA) offered loans of $40,000 to $60,000 to nearly 900,000 entrepreneurs across the country.

They must now repay this debt by January 18 in order to benefit from a grant of $10,000 to $20,000. Otherwise, they will have to repay the full loan amount within three years, with an interest rate of 5%.

Catherine Audet, owner of the local product store La Mistinguette in Montreal fears that it will not be able to repay its loan taken out through this emergency aid.

She must repay $30,000 by the deadline in order to keep the subsidized amount of $10,000. The entrepreneur could also benefit from a reprieve until spring by borrowing this amount from the bank. Otherwise, it's more like $40,000, plus interest, that she will owe Ottawa.

I’ve had the store for 11 years. I can't believe I'm going to have to close just because of the $30,000 I owe the government.

A quote from Catherine Audet, owner of La Mistinguette boutique

However, the uncertain economic context is weighing down its turnover. At the end of each month, I have no profits, she confides. There is also the economic crisis… people may have less money to spend.

A few meters further on, on Wellington Street, designer Marilyne Baril, owner of the women's clothing boutique Marigold, is liquidating her merchandise in order to repay her debt to the government.

We don't have that many choices available to us […] we have to refinance this loan with the banks. Then everyone knows, interest rates are increasing, it’s crazy, she laments.

Groups representing entrepreneurs are calling on the government to extend the deadline by a year, such as the Canadian Federation of Business independent (CFIB).

Across the country, more than 200,000 SMEs are at risk of closure due to their high level of debt. And that's why the government must quickly announce the extension of the reimbursement deadline.

A quote from Jasmin Guénette, vice-president of national affairs at the CFIB

Same story for Karl Blackburn, CEO of the Conseil du patronat du Québec. With interest rates rising, with production costs increasing, it's clear they're not even at the same level they were at before COVID-19, he says.

On the government side, spokesperson Katherine Cuplinskasa argues that the Ministry of Finance has already pushed back the deadline from the end of 2022 to the beginning of 2024. This additional flexibility is important support for small businesses that may still be struggling to make ends meet, she added.

Based on a report by Elyse Allard

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