Calgary Businesses Await CEBA Loan Payment Deadline

Many are preparing for the upcoming deadline to repay their CEBA loans on January 18, a lifeline in the pandemic era.

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David Sturies will have to make some tough financial decisions over the next week.

Less than a week before the deadline to repay his Canada Emergency Business Account (CEBA) loan, the owner of Lil’ Empire Burger, which has three locations in Calgary, and Empire Provisions are weighing their options.

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“We’re contemplating whether or not we can pay it on time,” Sturies said Thursday. “It’s not a fun thing to think about. It’s weighing on all of our minds, that’s for sure.”

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Many Calgary and Alberta small businesses are preparing for the Jan. 18 deadline to repay their CEBA loans, a pandemic-era lifeline that offered up to $60,000 to small businesses and non-profits. If small businesses repay $40,000 of that loan by next week’s deadline, which has already been pushed back more than a year from the original deadline, the additional $20,000 will be forgiven.

Now that that $40,000 bill is due, the federal government is offering some options for businesses that can’t make it. The first scenario allows businesses to work with their bank to refinance the loan, in which case the federal government will honor the $20,000 loan forgiveness.

Door 2, which Sturies hopes to have to open for Empire Provisions, is to convert the entire $60,000 loan into a three-year loan at five percent interest, with full maturity in December 2026.

The deadline is putting Sturies and other Calgary businesses on the spot after four years of dealing with pandemic shutdowns, lower consumer spending, high utility costs and overall cost increases.

“A lot of people are scared, a lot of people are stressed,” said Sturies, who was able to pay off his CEBA loan for Lil’ Empire Burger.

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Christmas spending lower than expected

Retail businesses expected holiday expenses to cover most of the change needed to cover their payments, Deborah Yedlin, president and CEO of the Calgary Chamber of Commerce, said in an interview.

But Christmas spending ended up being 20 percent less than expected, he said.

“I think a lot of businesses were hoping to offset that delta, to be able to apply for repayment of the CEBA loan during the holiday season,” Yedlin said.

Data collected by the Canadian Federation of Independent Business (CFIB) found last October that seven in 10 CEBA borrowers had not started repaying their loans.

Because there were no penalties or benefits for paying early, that figure is expected to skyrocket in the coming weeks, said Katherine Cuplinskas, senior communications adviser to the federal finance minister. By August 2023, a fifth of CEBA beneficiaries had repaid their loans in full, she said.

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Cuplinskas said the flexibility beyond Jan. 18 is “significant support for small businesses that may be struggling to make ends meet.”

These are particularly difficult times for the hotel industry, known for its tight margins. A recent survey by the Alberta Hospitality Association found 80 per cent of its members were “deeply concerned” about refunds.

Meanwhile, a survey by Restaurants Canada found that one in five restaurants with a CEBA loan are on the verge of closing one or more locations. That data also found that 53 percent of foodservice operators are operating at a loss or just breaking even, a number that was low before COVID-19.

‘There will be some closures’

Ed Donszelmann, owner of OTTO Food and Drink in Edmonton, said he is “one of the lucky ones” who will be able to repay the loan (he will officially pay it off Tuesday), but he was forced to dip into his personal savings to cover it. .

He said when pandemic restrictions were lifted, restaurants were optimistic that some of the money saved over the previous year would be used for dining. But as inflation has risen and costs have risen for those companies, margins have remained dangerously low.

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“With all the support from the federal government and the provincial government, that’s the only reason we survived,” Donszelmann said. “My business is barely staying afloat and I don’t pay myself much.”

Jeff Jamieson by Donna Mac
Jeff Jamieson, owner of Donna Mac, says restaurant owners are still dealing with the effects of COVID-19. Darren Makowichuk/Postmedia

Jeff Jamieson, founding board member of the Alberta Hospitality Association (AHA) and owner of Calgary restaurant Donna Mac, said it’s been one battle (and cost) after another since the start of COVID-19.

“There will be some closures,” he said. “There will be some people who will simply decide that the additional burden puts them over the edge and there is no point in continuing any further.”

Downtown Calgary remains in deep recovery from the pandemic and may need more time to recover, said Mark Garner, executive director of the Calgary Downtown Association. Four million people traveled along Stephen Avenue in 2023, he said, the most since 2019, but overall foot traffic downtown remains very low, a key indicator of the health of downtown businesses.

“Office occupancy, just the number of employees in the neighborhood, is still not back to the 2019 number,” Garner said.

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Meanwhile, rural mom-and-pop operations are likely to be hardest hit by current conditions because they have smaller populations to benefit from, said Mona Pinder, owner of Mona’s Table and executive director of AHA.

As more local businesses come through the doors, Jamieson added, larger conglomerates are likely to fill the spaces, reducing the number of mom-and-pop stores.

“I think culturally it’s a disaster,” Jamieson said.

For Sturies, uncertainty over when the loan, which was officially settled in September when the final two-week extension was announced, comes due, has made it difficult to plan for what’s next. It represents another level of stress for business owners.

“Owning a small business is stressful enough, and having this weigh on your conscience is even more so.”

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