The federal government will be extending the deadlines for Canada Emergency Business Account (CEBA) loan repayments, but Restaurants Canada says it’s not enough for many struggling businesses.
Prime Minister Justin Trudeau announced Thursday that it would extend the overall loan repayment deadline by a year to Dec. 31, 2026. However, the deadline to meet the condition for the forgiveness grant of up to $20,000 was increased by just 18 days, from Dec. 31, 2023, to Jan. 18, 2024. The government previously announced a one-year extension in January 2022.
“It’s a first step,” said Mark von Schellwitz, vice president with Restaurants Canada for Western Canada.
He said the advocacy group for restaurants and service industry is disappointed by the length of the extension.
“It’s very tough times when you’ve got half the industry that’s not making any profit at all right now due to a combination of that pandemic-related debt, labour shortages and, of course, record-high inflation,” Schellwitz said.
“We haven’t fully recovered yet.”
CEBA was available from April 9, 2020, to June 30, 2021, and provided $49 billion in interest-free, partially forgivable loans of up to $60,000 to nearly 900,000 small businesses and not-for-profit organizations to help cover their operating costs during the COVID-19 pandemic.
“For CEBA loan holders who make a refinancing application with the financial institution that provided their CEBA loan by Jan. 18, 2024, the repayment deadline to qualify for partial loan forgiveness now includes a refinancing extension until March 28, 2024,” the federal government said in a news release Thursday.
Loans that are still outstanding on Jan. 19, 2024, will convert to three-year term loans, subject to interest of five per cent per year, the government said, “with the term-loan repayment date extended by an additional year from Dec. 31, 2025 to Dec. 31, 2026.”
Restaurants Canada has been asking the government to extend the intertest-free period by a year.
“We’ve got a lot of restauranteurs — more than 80 per cent of them — that took on CEBA loans and other debt just to get through the pandemic, keep their lights on and keep their staff employed,” Schellwitz said.
“We’re a little disappointed… that our request… to extend this another year hasn’t been granted,” he added. “The government has now made it so that the year-long extension on the CEBA repayment is conditional on beginning repayments and refinancing the loan in full by March 28, 2024,” Restaurants Canada explained in a news release.
“We need the federal government to extend the interest-free period and allow restaurants to access the forgivable portion of these emergency loans that were taken out to survive the COVID-19 lockdowns.”
According to a Restaurants Canada survey in July, 51 per cent of restaurants are operating at a loss or barely breaking even, compared to 12 per cent pre-pandemic.
“We’ve got a lot of restaurants that I think are not going to be able to get into any sort of refinancing arrangement with their banks,” Schellwitz said. “We certainly don’t want to see more closures.”
He’s upset the government couldn’t do a little bit more.
“However, it is a step in the right direction. We certainly want to acknowledge that.”
Meanwhile, Schellwitz is urging Canadians to support their local restaurants.