Calgary businesses staring down CEBA loan repayment deadline

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David Sturies must make some powerful monetary selections over the subsequent week.

Lower than per week earlier than the deadline to repay his Canada Emergency Enterprise Account (CEBA) mortgage, the proprietor of Lil’ Empire Burger — which has three areas in Calgary — and Empire Provisions is weighing his choices.

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“We’re considering if we are able to repay it or not in time,” Sturies mentioned Thursday. “It’s not a enjoyable factor to consider. It’s weighing on all our minds, that’s for positive.”

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Many Calgary and Alberta small companies are bracing for the Jan. 18 deadline to repay their CEBA loans, a pandemic-era lifeline that provided as much as $60,000 to small companies and not-for-profits. If small companies repay $40,000 of that mortgage by subsequent week’s deadline, which has already been pushed again by greater than a 12 months from the unique deadline, the extra $20,000 shall be forgiven.

With that $40,000 invoice coming due, the federal authorities gives a number of choices for companies that may’t make it. The primary state of affairs permits companies to work with their financial institution to refinance the mortgage, wherein case the federal authorities will honour the $20,000 mortgage forgiveness.

Door 2, which Sturies expects he must open for Empire Provisions, is to transform the complete $60,000 mortgage right into a three-year mortgage at 5 per cent curiosity, due in full by December 2026.

The deadline is placing Sturies and quite a lot of different Calgary companies in a pinch after 4 years of grappling with pandemic closures, decrease client spending, excessive utilities prices and total value will increase.

“Lots of people are scared, lots of people are stressed,” mentioned Sturies, who was in a position to repay his CEBA mortgage for Lil’ Empire Burger.

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Vacation spending decrease than anticipated

Retail companies hoped vacation spending would cowl a bulk of the change wanted to cowl their repayments, Deborah Yedlin, president and CEO of the Calgary Chamber of Commerce, mentioned in an interview.

However vacation spending ended up 20 per cent decrease than anticipated, she mentioned.

“I feel lots of corporations have been anticipating to make up that delta — that they might be capable of apply to the CEBA mortgage reimbursement over the vacation season,” Yedlin mentioned.

Knowledge compiled by the Canadian Federation of Impartial Enterprise (CFIB) discovered final October that seven in 10 CEBA debtors hadn’t began repaying their loans.

As a result of there weren’t penalties or advantages to repaying early, that quantity is predicted to skyrocket over the approaching weeks, mentioned Katherine Cuplinskas, senior communications adviser for the federal finance minister. As of August 2023, one-fifth of CEBA recipients had repaid their loans in full, she mentioned.

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Cuplinskas mentioned the flexibleness past Jan. 18 is “vital help for small companies who could be struggling to make ends meet.”

Instances are notably difficult for the hospitality trade, identified for its slim margins. A current survey performed by the Alberta Hospitality Affiliation discovered 80 per cent of its members had “deep concern” over the repayments.

In the meantime, a survey by Eating places Canada discovered one in 5 eating places with a CEBA mortgage are on the point of closing a number of areas. That information additionally discovered 53 per cent of meals service operators are working at a loss or barely breaking even — a quantity that was within the low teenagers earlier than COVID-19.

‘There’s gonna be some closures’

Ed Donszelmann, proprietor of OTTO foods and drinks in Edmonton, mentioned he’s “one of many fortunate ones” who will be capable of repay the mortgage — he’s formally paying it off Tuesday — however was compelled to dip into his private financial savings to cowl it.

He mentioned that when pandemic restrictions lifted, eating places have been optimistic a few of the cash saved over the earlier 12 months can be used for eating. However as inflation climbed and prices rose for these companies, margins have stayed dangerously low.

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“With all of the federal authorities and provincial authorities help — that’s the one motive that we survived,” Donszelmann mentioned. “My enterprise, it’s barely simply maintaining afloat and I’m not paying myself an entire lot.”

Jeff Jamieson, founding board member of the Alberta Hospitality Affiliation (AHA) and proprietor of Calgary’s Donna Mac restaurant, mentioned it’s been one battle — and value — after the opposite for the reason that starting of COVID-19.

“There’s gonna be some closures,” he mentioned. “There’s gonna be some those who simply determine that extra burden places them over the sting and it doesn’t make sense anymore to hold on.”

Calgary’s downtown stays in deep restoration from the pandemic and will use extra time to get again on its ft, mentioned Mark Garner, govt director of the Calgary Downtown Affiliation. 4 million folks travelled by way of Stephen Avenue in 2023 he mentioned — probably the most since 2019 — however total downtown foot visitors stays manner down, a key indicator of downtown companies’ well being.

“Workplace occupancy — simply the variety of workers again within the neighbourhood — remains to be not again to that 2019 quantity,” Garner mentioned.

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In the meantime, rural mom-and-pop operations are prone to be probably the most hard-hit by present circumstances as a result of they’ve smaller populations to profit from, mentioned Mona Pinder, proprietor of Mona’s Desk and govt director of AHA.

As extra native companies head for the doorways, Jamieson added, bigger conglomerates will doubtless fill the areas, lowering the variety of family-owned outlets.

“I feel culturally it’s a catastrophe,” Jamieson mentioned.

For Sturies, uncertainty round when the mortgage can be due, which was formally settled in September when the ultimate two-week extension was introduced, has made it arduous to plan for what’s subsequent. It quantities to a different stage of stress for enterprise house owners.

“Proudly owning a small enterprise is disturbing sufficient, and having this weighing in your conscience, it’s simply much more.”

mscace@postmedia.com
X: @mattscace67

This story has been up to date to mirror that Empire Provisions is assessing alternate options for repaying its CEBA mortgage and Lil’ Empire Burger has repaid its CEBA mortgage.

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