Calgary small business owners, along with the Alberta NDP, are asking for provincial support to offset the looming deadline for Canadian Emergency Business Account (CEBA) loans.
The no-interest loans, which were issued to small and medium businesses (SMEs) during the Covid-19 pandemic to cover costs and keep businesses afloat, have become difficult to pay off say local small business owners due to an extended economic downturn.
Sukhbans Jakhu, owner of Heating and Cooling Fundamentals Ltd. said that rising inflation and interest rates has led to pressure to pay for mortgages, maintaining inventory, and having enough staff.
“We have very low profit, very high expenses, and it is very hard to manage in these days—it is hand to mouth for most of the small businesses these days,” said Jakhu.
He said that while CEBA was very useful to save his business during the pandemic, the economic realities of running a small business in an uncertain economy make it necessary to extend that payment period by one to two years.
The Federal Government has already extended the CEBA repayment period by a year to December 31, 2023, but has said they will not be extending the deadline further.
“We fear that if we are not able to pay $40,000 by the end of this year, we will also have to pay back the additional forgiveness amount of $20,000, which will only result in us being in more debt and eventually shut down our businesses,” said Navdeep Brar, who owns an immigration consulting business in Calgary.
“Time is running out for us, and we hope our governments will understand our issues and stand with us, and come up with a much needed solution for us.”
The Canadian Chamber of Commerce, along with 280 industry associations including the Calgary Chamber of Commerce, asked Canada’s Minister of Finance, Chrystia Freeland, to extend the loan repayment period for an additional two-years to 2025, citing that 49 per cent of Canadian small businesses are still making below normal revenues.
Businesses that fail to make the CEBA repayment schedule by December 31, forfeit the up-to $20,000 forgivable portion of their loan, and are then will charged 5 per cent interest per annum.
Alberta NDP calls on Province to provide support through ATB
Gurinder Brar, Alberta NDP critic for Small Businesses, called on the provincial government to institute a new low-interest loan program via ATB Financial, to cover two-thirds of a businesses’ CEBA loan.
“Small businesses need certainty for the future and a provincial government that will support them. Providing businesses a low interest loan will address the anxiety of the looming CEBA deadline without jeopardizing their businesses,” he said.
The program of loans proposed by the NDP would to pay off the CEBA loan before the deadline, and would incorporate the forgiveness portion of the CEBA loan.
For a small business that took out a $60,000 CEBA loan, ATB Financial would loan that business $40,000, and the Federal Government would forgive the remaining $20,000.
Brar said that he didn’t have an estimate for how much the loans would cost the province, but said that it would save $2 billion from the federal program.
“If this gets covered, $2 billion is up for grabs for Alberta small businesses.”
Brar said that he sent a letter to Ottawa in June to raise the issue with the Federal Government, but has not heard back.
“We will continue to call them, we will continue to write, to them reach out to them.”
Jagraj Singh Sohi, owner of JD’s Flooring and Decor World, said that he was asking the province for a supportive solution.
“We, as small business owners, are looking up to the provincial government to step in with some supportive solution, one like MLA Brar has offered today, which might act as a sigh of relief to keep our businesses and livelihoods alive,” he said.
CEBA deadline could lead to loss of tens of thousands of small businesses in Alberta
According to data from Statistics Canada, the Federal Government still has over $40 billion in CEBA loans on it's books, and that a relatively small amount of nearly $7.5 billion has been repaid or forgiven since the peak of the program, when there was $49 billion in total loaned to businesses.
According to a report issued by the Canadian Federation of Independent Businesses, just 10 per cent of SMEs have fully repaid their CEBA loans. Over 78 per cent, according to that same report, have not yet made any payments.
In Alberta, that repayment number is closer to eight per cent. That report also indicated that 47 per cent of CEBA loan holders are likely to miss the December 31, 2023 deadline.
The CFIB said that over 34,000 businesses "strongly agree they would question the future of their business if they lost the forgivable part of their loan."