Up to 13K small businesses in Atlantic Canada unlikely to meet CEBA loan repayment deadline: CFIB

January is often seen as the toughest month of the year for small businesses, especially those in retail, following the holiday season. It’s a stress that has only been magnified by the Jan. 18 deadline to repay the Canada Emergency Business Account (CEBA) loan.

Hundreds of thousands of small businesses across the country took advantage of this fund when it was created during the COVID-19 pandemic to help ease the financial burden. Now the time has come to pay back the full $60,000 in loans, and many won’t be able to.

“Small business owners are extremely optimistic, sometimes they are overly optimistic,” says Frédéric Gionet, senior policy analyst for the Canadian Federation of Independent Business (CFIB) for Atlantic Canada. “They find solutions, they ae very innovative to find solutions to their problems but I think for some of them it might be too much to handle.”

Those who can pay in full by the deadline will see $20,000 of the $60,000 forgiven. Those who cannot meet the Thursday deadline to repay their $60,000 in CEBA loans will owe the full amount plus five per cent interest over the next three years with monthly payments starting immediately.

“What is adding 1,800 dollars a month? Well it means almost 10,000 dollars in additional sales just to get that amount after profit just to pay that thing so it’s a hurdle,” Gionet says for those who cannot meet the CEBA repayment deadline. “On top of all the other taxes that have increased, we have estimated the cost of an employment has increased about $5,500 just on CPP (Canada pension plan) and EI (employment insurance).”

Some businesses have already settled their debts ahead of the deadline. Gaye Ann Walsh, president of Walsh Luggage located inside Saint John’s Market Square, has paid back her CEBA loan.

“I’m still working a lot of long hard hours to try and keep things rolling the way that I want,” admits Walsh. “I didn’t want to be one of the people in January sitting around the house crying because you didn’t have what you needed to have.”

Those who haven’t paid back the loan are unsure of what will happen next.

“Doesn’t help that it is due in a really, really slow time of year but it is what it is,” says Pristine co-owner Matt Shields, who has not paid his CEBA loan back and is unsure if his business will be able to in just two days. “It is stressful but at the end of the day you have to come good on your debts in business and in life so you do what you can to make it work.”

Shields isn’t alone in his struggles, with Gionet noting his phone has been ringing nonstop from concerned business owners who wont be able to make ends meet.

“If a fifth to a third of small businesses cannot pay their CEBA loans for the forgivable amount for the deadline tomorrow, that means nine- to 13,000businesses in Atlantic Canada are in that situation,” Gionet says.

He says hundreds if not thousands of these businesses will likely not reopen if they cannot repay their CEBA loans and are forced to close. Even for those who are able to repay their loans on time and can keep their doors open, Gionet expects not much wiggle room for those businesses if anything comes up.

Gionet says he will continue to fight for a deadline extension until Jan. 18.