1 in 5 Alberta restaurants will close on heels of CEBA repayment deadline: Hospitality Association
Posted Jan 18, 2024 11:08 am.
Last Updated Jan 19, 2024 8:40 am.
Thursday is the day the federal government’s pandemic support for businesses comes to an end.
Tens of thousands of Alberta businesses are facing the Canada Emergency Business Account Loan (CEBA) loan repayment deadline, which some fear will push many to close their doors for good.
The 125,000 Alberta businesses that took advantage of the loans, valued up to $60,000, have to pay it back today — or else their debt will be converted into a three-year loan with five per cent annual interest.
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However, those that pay it back on time can be forgiven for up to one-third of what they borrowed.
Dan Kelly, president of the Canadian Federation for Independent Business fears it could be the nail in the coffin for many who are already struggling.
“But I suspect over the next number of months, we’re going to see a huge wave of small business closures as businesses recognize they’re just not going to be able to get this debt behind them,” he said.
In fact, Ernie Tsu with the Alberta Hospitality Association, says the loan payment will cause one in five restaurant owners in the province to close the doors of at least one of their locations.
“It’s been very hard. The spike in inflation, on food costs, have really, really hurt a lot of restaurants,” he said. “They can’t just keep raising prices — [we’re] in a market where guests are struggling on their own.”
Kelly noted that the loan payments won’t help the feds as much as they might hope, as taxpayers will be the ones on the hook for paying the price if business owners can’t.
“Yes, the program is costly, but if businesses close because the program has come to a screeching halt, these businesses may wrap things up and default on their entire loan, leaving taxpayers on the hook for the entire $60,000,” he explained.
Many calls to extend the Jan. 18 deadline were made, but on Tuesday, Prime Minister Justin Trudeau said it’s time to wrap up pandemic financial aid programs.
Small business advocate Michael Wood, says this couldn’t come at a worse time for struggling Canadian businesses.
“Out in British Columbia, forest fires; for perhaps, Ontario maybe inflation is a bit higher in Ontario — we’re dealing with compounding issues across the country and every single area is dealing with their own challenges,” he said.
Those who make the deadline can receive up to $20,000 in forgiveness, but business owners who can’t will have their debt converted into a three-year loan with five per cent annual interest.
