Small businesses scrambling last minute to meet repayment deadline for CEBA

With the arrival of the repayment deadline for Canada Emergency Business Account (CEBA) loans, some small business owners say they've been scrambling at the last minute to get their payments in on time.

In 2020, the federal government gave out almost 900,000 interest-free CEBA loans worth about $50 billion as a lifeline to businesses during the COVID-19 pandemic. The repayment deadline is Thursday and up to one-third would be forgiven if the outstanding amount is paid in time.

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The deadline was originally Dec. 31, 2022, and had already been extended twice. But despite pleas from some business groups, Prime Minister Justin Trudeau has declined to extend it a third time and said on Wednesday that business owners struggling to pay back the loan in time should look into refinancing options.

"If they can't quite make it by the 18th, there are plenty of financial institutions who are there to give low cost loans," he told reporters.

That's exactly what Shivani Dhamija, owner of Shivani's Kitchen in Newport Station, N.S., had been doing.

Dhamija, whose business produces retail food, spent Thursday going "bank-to-bank-to-bank" in order to get a loan approved and refinance the $40,000 she borrowed through CEBA. She says she will be able to meet the federal government's deadline.

"I have got my cheque of $40,000 now and I will be taking it in [a] few minutes to my other bank who gave me this CEBA loan," Dhamija told CTV News Channel on Thursday.

While Dhamija will be able to take advantage of the partial loan forgiveness, she says she still regrets taking out the loan in the first place and calls it "a very big mistake of mine." The high inflation that ensued after the COVID-19 pandemic meant that her business had to take on even more debt.

"Taking (the CEBA loan) was I think easier. But paying it off was very difficult. And especially what happened was after the pandemic when the inflation came, we were not able to save," she said. "My business should have died two or three years ago. That would have been better."

The federal government said nearly 70 per cent of recipients qualified for the partial loan forgiveness as of Jan. 15. But not all business owners have been so lucky.

Luis and Dianna Raposo, owners of Impact Boxing and Fitness in downtown Calgary, also took a $40,000 CEBA loan after the pandemic restrictions shut down public gyms across Canada. However, the Raposos say they've been unable to secure any refinancing for their loan.

"We tried many different options. We tried a couple of different banks, a couple lenders, and the interest rates are just too high for some of these term loans. Our business bank that we have dealt with for 23 years turned us down for a term loan to pay back the $40,000," Dianna told CTV News Channel on Thursday.

For the Raposos and other business owners unable to repay or refinance their loans by the deadline, the CEBA debt would convert into a three-year loan with five per cent annual interest and no forgiveness.

Even after COVID-19 restrictions ended, the number of people coming to work out at the gym has not returned to pre-pandemic levels, which may be the final knockout blow for this long-running business.

"With the situation of the COVID … they took all the business away from downtown. So it's a real struggle to even trying to get people in the door," Luis said. "We're going to have to file for bankruptcy. And we've been going over 22 years."

"We will try to keep our doors open the best that we can but it has been a struggle from the pandemic on and we'll just keep trying," Dianna said. "We'll just keep moving forward."