Business owners struggling to pay back COVID-19 loans with rising operating costs – National | 24CA News
Running a business can imply lengthy days and tight margins, and whereas pandemic restoration continues, the compensation of loans racked up in the course of the world emergency is including to these common stresses.
Downtown Ottawa restaurant Union Local 613 proprietor Ivan Gedz is not any stranger to that feeling.
He is banking on Ottawa Pride on the finish of August to attempt to assist get his books within the black.
He says usually, he wouldn’t be counting on a single occasion, however with cash tight, it’s bringing on powerful shopping for choices.
“Right now, I’m, you know, ordering a case of wine or a couple of kegs of beer. I have to make these very delicate decisions just to maintain cash flow,” Gedz mentioned.
Like many companies, Gedz says Union Local 613 shouldn’t be even remotely near recovered from the COVID-19 pandemic, estimating total income is down about 25 to 30 per cent.
The bar is among the almost 900,000 companies that took out Canadian Emergency Business Account (CEBA) loans. Initially, the interest-free loans capped out at $40,000, however because the pandemic dragged on and public well being restrictions remained in place, a $20,000 extension was supplied.
If companies are in a position to pay again as much as $40,000 of the mortgage by Dec. 31, $20,000 will likely be forgiven. If not, the business is on the hook to pay it again over the subsequent two years with a 5 per cent rate of interest.
In the present business local weather, Gedz says that isn’t within the playing cards proper now.
“I’ve also injected substantial funds into the business since then. And just as a caveat, not that I necessarily deserve it or whatnot, but I haven’t paid myself prior the five months at this point,” he mentioned.
He added that the rising value of doing business isn’t serving to the restoration, pointing to elevated prices coming from suppliers.
Gedz isn’t alone on this. The Canadian Federation of Independent Business (CFIB) polled its membership earlier this 12 months about their means to pay again CEBA loans by deadline.
Of the 98,000 CFIB members, 43 per cent say they won’t be able to repay the debt by that year-end deadline. Forty-seven per cent say they are going to have the ability to pay, however it will likely be a big battle for half.
This prompted the CFIB to put in writing to the federal government, asking for a one-to-two-year extension on that deadline.
“We’re not saying forgive the debt. We’re not going that far. We’re telling them, just give business owners, small business owners more time,” CFIB nationwide affairs director Christina Santini mentioned.
If you go onto the webpage for CEBA, the phrases are clear – compensation dates are remaining and arising quickly. The authorities states it already supplied a one-year extension on compensation.
In complete, $49.2 billion in CEBA loans had been doled out via this system.
That prior extension is chilly consolation to Ottawa-based Orangetheory Fitness franchisee Marc Langelier. He opened his location in late 2020, and says he has no concrete plan on methods to pay again his mortgage.
“Well, currently we’re just making ends meet. That’s not considering CEBA payments or interest on loans,” Langelier mentioned.
“So, it would push us into the red for sure. So now I think we would still give it a shot for the next six to 12 months.”
While inflation is exhibiting indicators of cooling, meals costs stay excessive. This has Gedz conserving Union Local 613 open for not less than just a few extra months, nevertheless it’s not wanting good.
“I’m probably going to try and push through till the spring. But the amount that I’m leveraging my personal home in order to do that and so on and so forth, is there’s some dark nights, grumpy early mornings associated with that. I won’t lie,” he mentioned.
— with recordsdata from Global News’ Touria Izri
© 2023 Global News, a division of Corus Entertainment Inc.
