CEBA loan extension crucial for small businesses, report says

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This article was published 08/06/2023 (851 days ago), so information in it may no longer be current.

ON Raquel Ferrer’s agenda: installing the new payment system at her restaurant, whipping up pork buns and gelati, and learning the ropes of management.

“It’s a lot of stress,” said The Supreme Ice Cream Shoppe’s co-manager.

Still, she loves the business. People snake through the store waiting for cool treats on warm days; the shop blends Filipino cuisine with milkshakes and homemade gelati.

Ferrer and business partner Maricris Santos took over the Maples area restaurant a couple weeks ago.

Both have been employees for years — Santos, for six.

“We love the kitchen… we love creating new recipes,” Ferrer said, adding the two are “overwhelmed with the processes” of running a business.

There’s equipment to upgrade and legal matters to oversee. Further, the shadow of the COVID-19 pandemic hasn’t left — namely, the Canada Emergency Business Account (CEBA) loan.

Companies could access up to $60,000 through the federal loan during the pandemic. Its repayment date inches closer, coming Dec. 31.

Businesses that pay by year end will see one-third of their loan forgiven by Ottawa.

Ferrer and Santos hope for a nation-wide payment extension.

“It would be a really big help,” Ferrer said, adding the company is still paying back its loan.

Having extra time with the loan would allow The Supreme Ice Cream Shoppe to upgrade its equipment and stock more ingredients, Ferrer said.

A CEBA loan extension is crucial for at least 8,000 Manitoba small businesses, according to a report the Canadian Federation of Independent Business released Wednesday.

Nineteen per cent of Manitoba small businesses could risk closure if forced to repay their CEBA loan by year end, to get the loan forgiveness portion, the CFIB said.

“We’ve seen almost every line item in budgets for small businesses go up,” said Brianna Solberg, the CFIB’s director of legislative affairs for the Prairies and Northern Canada.

“Not to mention, interest rates have been continuously on the rise.”

More than two-thirds of Manitoba CEBA users accessed loans between $40,001 and $60,000. Just 12 per cent of users have repaid their loans, the CFIB found.

Nearly half of Manitoba CEBA recipients — 42 per cent — might miss the Dec. 31 repayment deadline. The number increases when looking at arts and recreation organizations (62 per cent) and hospitality businesses (61 per cent).

“If they don’t meet that Dec. 31 deadline, they’ll completely lose the forgivable portion which was promised to them in good faith,” Solberg said. “A lot of them were banking on that, so if they lose that, it could be bad.”

Fifty-five per cent of Manitoba small businesses indicated to the CFIB they’d like an extension on the repayment deadline.

The CFIB is calling for Ottawa to push the deadline to December 2025 or, at the earliest, next year.

The advocacy group also wants debt forgiveness to increase to 50 per cent of the loan.

“Small businesses have fought hard for the last three plus years to survive the pandemic,” Solberg said. “They’re still facing significant challenges on their recovery.”

She believes an appeal process for CEBA loan recipients now deemed ineligible is necessary. An estimated 50,000 businesses have been told they’ll need to repay their loan in full without forgiveness, Solberg said.

Roughly two to three per cent of Manitoba businesses fall in the category, she added.

“I think every business, hair salon, spa, whatever… (has) kind of handled it differently,” said Lisa Glass, a hairstylist at Meraki Beauty Collective.

She lost some clients during the pandemic and has watched small businesses recently shutter. Still, many have found ways to repay their loans, she noted.

“I mean, you get the fear of God into (them),” she said, adding loan repayment might also lead to more business closure.

Businesses who don’t repay their CEBA loan by Dec. 31 will lose the loan’s forgivable portion and face five per cent interest on the full balance.

The loan’s original repayment date was at Dec. 31, 2022. It was pushed back last year.

Ottawa approved $49.2 billion in funding through the CEBA program.

gabrielle.piche@winnipegfreepress.com