Repaying loans is creating another financial challenge for our local business community.
According to the Canadian Broadcasting Corporation (CBC), The Bank of Canada recently increased interest rates and now the Canada Emergency Business Account (CEBA) repayment deadline is looming. Many small business owners are facing more debt and more barriers to the long road of recovery from the pandemic.
As we previously stated in our March Voice of Business column, it cannot be stressed enough that CEBA loan repayment is still a challenge for many small businesses. Recently, the Canadian Chamber of Commerce and 280 industry associations penned a letter to Minister Freeland highlighting the number of businesses who may not survive in the long term due to ever growing debt. According to the letter, 49% of small businesses’ revenues are still below normal, and approximately half of tourism-based businesses may not survive in the next few years.
“…not all businesses have their heads above water yet: they’re facing extreme inflation, unreliable supply chains, and the tightest hiring market in a generation. They’re just asking for more time to pay the government back.”
- Matthew Holmes, Senior Vice President of Policy and Government Relations, Canadian Chamber of Commerce
In another turn of events, the federal government announced a cabinet shuffle on July 26. In this change, there will be a new Minister of Small Business, MP Rechie Valdez. Valdez is a former small business owner herself. We look forward to seeing what she can bring to the table. In the swearing-in ceremony, she stated she would like to make small business its own portfolio.
The need for an extension has already come up in the past. In 2021, the Peterborough and the Kawarthas Chamber of Commerce authored a Policy Resolution for the Canadian Chamber of Commerce calling on the federal government to:
1. Extend the deadlines for repayment of the Canada Emergency Business Account program by two years.
2. Make the forgivable portion of the loan available to all businesses that continue to have operations impacted by ongoing COVID-19 public health restrictions throughout 2021.
3. Allow businesses that continue to have operations impacted by ongoing COVID-19 public health restrictions in 2021 to be exempt from incurring interest prior to the balance of their loan being due.
With the deadline to receive partial loan forgiveness approaching in approximately 5 months, it is imperative that those who can repay their loans do so and return those funds back to government coffers. We can ease the decision for the government to extend the loan repayment windows for the businesses that are struggling the most. We have a new Minister of Small Business, which means now is the time to remind the government that not all businesses have recovered and are in a position to pay back their debts.
While most of the restrictions and challenges of the pandemic are over, we are still seeing the lasting impacts for the small business community. Peterborough and the Kawarthas’ economy depends on tourism and hospitality businesses, so let’s continue to work together to climb the ladder out of the pandemic slump still facing us today, hopefully with continued support from the federal government.