'Already struggling to make ends meet': Some businesses taking on debt to pay off CEBA loans
Thursday was the deadline to pay back Canada Emergency Business Account loans and some business owners are taking on new debt to pay it off.
“We’re already struggling to make ends meet,” said Graeme Kobayashi, the owner of the Counterpoint Brewing Co. in Kitchener.
The federal government handed out around $49 billion to help small businesses stay afloat during the COVID-19 pandemic.
Close to 900,000 businesses across the country applied for the CEBA loans, including Kobayashi who borrowed the maximum amount allowed - $60,000 – in 2021.
Now he’s replacing one debt for another.
“[I’m] unable to pay it myself with the cash that I currently have,” he said. “I was able to refinance it, kind of at the eleventh hour last night. I was able to secure another loan that allowed me to pay it off.”
CTV News was told some businesses have taken out new lines of credit, pushed back GST payments and even taken on a second mortgage to cover the costs.
Approved businesses received the money, at no interest, with up to $20,000 in loan forgiveness if the debt was paid on time.
The CEBA deadline to pay back the money has already been pushed back twice since 2022.
But this time, Ottawa said it’s time for business owners to pay up.
“We are now far enough from the pandemic that we do have to wrap up pandemic programs,” Prime Minister Justin Trudeau said on Wednesday.
“Back in 2020, [these] were designed as emergency programs,” explained Art Sinclair, the vice-president of the Greater Kitchener Waterloo Chamber of Commerce. “Well, those emergencies extended far longer than a lot of people anticipated.”
Some business owners worry the financial lifeline that saved them three years ago could now be the reason they close their doors for good.
“It’s a double-edged sword,” said Jeyas Balaskanthan, the executive director of the Uptown Waterloo BIA.
Kobayashi believes he’ll be able to weather the storm.
“It’s going to be a battle for awhile,” he said. “But I’m confident that every little bit will help and we’ll get through it.”
Businesses were able to apply for loan financing until the end of the day Thursday.
If approved, they’ll have until March 28 to pay off what’s owed.
If financing is denied, the remaining debt will be converted into a 3-year loan at five per cent interest.
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