MPs say CEBA repayment could cause crisis
November 15, 2023, 9:43 am
Ryan Kiedrowski, Local Journalism Initiative Reporter
As the CEBA loan deadline draws ever closer, many small businesses will be facing difficult decisions.
An estimated 65 per cent of small to medium businesses across the nation will simply not be able to meet the Jan. 18, 2024 deadline to pay back the loan—minus the amount to be forgiven.
Refinancing can be applied for by that same date if the loan can be repaid a couple months later, and if the dates just can’t be met, the CEBA loan automatically turns into a three-year term loan at five per cent to be fully paid by the end of 2026.
Some local Members of Parliament believe the current government just isn’t doing enough to help small business.
Wagantall says CEBA repayment could lead to bankruptcies
“They don’t seem to be aware of how some businesses are impacted more than others,” said Yorkton-Melville MP Cathay Wagantall. “The response after COVID for these small businesses that made it through the lockdown has not been strong enough in the economy for them to be able to afford for them to pay back that money, even though the government somehow thinks that they should be able to.”
Looking at the current economic state and applying the CEBA loan parameters to the equation, Wagantall notes the potential for 250,000 businesses declaring bankruptcy.
“Small businesses can pay off loans faster when they are up and running than when they are bankrupt,” she said.
Wagantall provided an example of a business from her riding that had a very serious risk of losing employees during the pandemic as workload ground to a halt.
The CEBA loan allowed the business to retain employees through the lockdowns, but slow economic growth post-COVID still nagged the company.
They successfully applied for a grant that allowed the business to recover and move forward, only to have the federal government claw back the amount of the CEBA loan from the subsequent grant.
“These guys have no opportunity to take advantage of the extended timelines because literally the government took all of the money back from the grant,” Wagantall explained.
Kitchen says feds didn’t think through CEBA program
Souris-Moose Mountain MP Robert Kitchen echoed those sentiments, calling the CEBA loan situation a huge weight on small business with a dramatic impact on the local economy.
“They’ve made it an impossible economic situation,” he said. “All of the communities throughout my riding are having huge impacts.”
Kitchen pointed out the confusion for many who took out loans in trying to navigate the red tape and ever-changing boundaries as the program rolled out.
“They didn’t think this through from the beginning when they first started it,” Kitchen said of the federal government.
“Ultimately, what we see here is basically this government’s economic failure and incompetence—in particular in dealing with small businesses.”
“They’ve been drowning in debt and they’re struggling to stay afloat,” he concluded.
Maguire says not all small businesses have fully recovered
Similar comments came from Brandon-Souris MP Larry Maguire, who relayed what he’s been hearing from business owners in his riding.
“Obviously, these small businesses have not recovered,” Maguire said. “Some have paid it back, but as strong as any business community might be, its still a difficult situation for some of the sectors.”
He pointed to the carbon tax as a culprit for raising prices on goods and services, which is being charged on every link of the delivery chain—producers, transportation companies and retailers.
“It’s a disincentive to rural Canada particularly because we have to raise the products and ship them to processing, they get processed and then they have to truck them back to us,” Maguire said, thus driving retail prices higher to the end consumer.
Another factor is the inflationary situation with one example of rental costs and mortgages doubling. Maguire pointed out how post-COVID, an estimated 53 per cent of Canadians are now within $200 of insolvency.
“That a pretty staggering number—that’s half of Canadians that are working,” he said.
It’s not just the Conservative members calling for a better deal on the CEBA loan for small business, the NDP have also joined the rallying voices. Skeena-Bulkley Valley MP Taylor Bachrach recently sponsored a parliamentary petition extend the Jan. 18 deadline for partial loan forgiveness until Dec. 31, 2024.
“Partial loan forgiveness was what made the CEBA loans attractive to many small businesses,” said Bachrach in a media release.“If these small businesses lose access to the forgivable portion of their loans, the closure of businesses that are the hub of our communities won’t have been prevented, only postponed. I hope this petition will show the government how many people across the country want the Liberals to stop dragging their feet by giving small businesses a fighting chance.”