Some Manitoba businesses consider financing to pay back CEBA loans on time, Chamber of Commerce says

Businesses and organizations that got government loans through the Canada Emergency Business Account (CEBA) program during COVID-19 closures are trying to pay them off in time to avoid further financial hardship.

However, rising inflation and lingering impacts of the pandemic are making it tough to do.

While some firms expect to meet the deadline, others are considering taking on more debt to do so.

“We most likely would’ve had to shutter the doors if we didn’t have that loan,” said Marc Pelletier, president of Winnipeg’s South Osborne Legion.

A $60,000 interest-free loan through CEBA helped the branch stay afloat.

With in-person activities picking up but still below pre-pandemic levels, the organization is turning its attention to paying off the loan.

“We are on track to be able to pay that back by the end of 2023,” Pelletier said.

A key deadline, because if it’s met the government will forgive up to $20,000 of each loan.

But that’s easier said than done, according to Loren Remillard, president and CEO of the Winnipeg Chamber of Commerce.

“For many businesses, particularly those from the hardest-hit sectors—hospitality, restaurants, arts and culture—it’s a stress that they’re really having to come to terms with,” said Remillard.

He said some businesses may not be in a position to pay back the loans, due in part to inflationary pressures, labour shortages and the ongoing impacts of the pandemic.

“So much so that some are exploring financing to pay back the loan so that they can get the $20,000 forgivable portion of it,” Remillard said.

The program, credited with providing aid at a time of great need, was administered by Export Development Canada (EDC)—a Crown corporation—and accepted applications between April 2020 and June 2021.

A total of 898,000 small businesses were supported by the program which dolled out $49 billion across the country.

In an emailed statement, EDC said it, “will not speculate on how many or when repayments will be received.”

“In the event that an eligible borrower is unable to repay the non-forgivable portion of their loan by December 31, 2023, they will be charged an interest rate of 5 per cent per annum on the outstanding balance commencing on January 1, 2024, and must repay their loan in full by December 31, 2025.”

Lobby groups want changes.

“We’ve suggested 50 per cent of the loan should be forgivable and giving the businesses now an extra year to repay it, so to the end of 2024 rather than the end of 2023,” said Dan Kelly, president and CEO of the Canadian Federation of Independent Business.

To pay back the money it borrowed, the South Osborne Legion had to delay other projects, including upgrades to accept debit and credit card payments.

“And now with having to pay back the loan and we’re not quite back where we want to be, it just keeps being put off,” Pelletier said.

Remillard said the Chamber’s pleased the government revised the repayment deadline from the end of this year to December 31, 2023.

It’s hoping the government will make $20,000 of each loan forgivable whether it’s paid on time or not.

The Canada Revenue Agency will work with EDC to collect any loans that are in default.      

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