Small GTA businesses still struggling to pay CEBA loans nearly 5 years later
The pandemic left lasting impacts on the economic sector, placing some companies on the brink of bankruptcy
Nearly five years after Ontario went into lockdown to reduce the spread of COVID-19, small businesses are still struggling to pay back their Canada Emergency Business Account (CEBA) loans.
Cathy Reid, who's owned Endless Tails Pet Nutrition Centre in Mississauga for 20 years, says she fears she may have to close.
"Everybody wants me to stay. But, unfortunately, between this loan, rent being so high and purchasing the food … It's been a little bit difficult," she told CBC Toronto.
Reid says she will be "devastated" if she has to leave her regular clientele and declare bankruptcy.
The CEBA program opened for applications on April 9, 2020, in the hopes of supporting businesses during the pandemic. Initially set at a $40,000 limit per company, it was later increased to $60,000 and provided more than $49 billion to nearly 900,000 businesses.
The loan was available through a variety of financial institutions, all of which had different ways of granting it— from credit cards, to cheques and direct deposit.
As of Dec. 31, 2024, there were still 161,000 small businesses owing money on their loans, Export Development Canada (EDC) told CBC Toronto in an emailed statement. That equates to a total of nearly $7.8 billion.
Reid took out a $40,000 CEBA loan with the Royal Bank of Canada at the recommendation of her then-accountant. She still hasn't been able to pay it back and attributes this to more Canadians choosing to shop online and difficulties affording pets and animal care products.
"I think online shopping has totally destroyed not just my business, but I think a lot of businesses," she said.
There are a variety of reasons why businesses have not been able to bounce back post-pandemic, says Ryan Mallough, vice president of legislative affairs at the Canadian Federation of Independent Business (CFIB).
"We had interest rates going up, cost of living, affordability challenges — people weren't spending the way that they were pre-pandemic," Mallough said.
Paola Girotti, owner and founder of Sugarmoon Salon, took out a $60,000 CEBA loan with TD Bank, but it wasn't enough to keep her three Toronto locations running.
"We were only ever able to get one grant because it was done per corporation, not by location," she said.
During the pandemic, Girotti had to close down one of her Toronto parlours, leaving her with salons only on the Danforth and at Bloor West. But, unlike Reid, she's since been able to rebuild, taking over lower capital investments of salons that are going out of business or needing some extra support.
"We do have a good model for success," she said.
Despite this, she says paying back the CEBA loan is not her primary concern.
"My first priority is to make sure that our staff are secure, that we're able to pay them," Girotti said.
She says she wishes the government would forgive the loan.
"They need to just allow businesses to wipe the slate clean," said Girotti.
Reid agrees that it's unfair to make businesses pay back CEBA money.
"There was a lot of fraud there that the government missed," she said. "I feel that they're coming after the people who work the hardest, the ones that are out there making a [mark] in the community."
A spokesperson for the EDC told CBC Toronto in a statement that the centre understands the financial struggle, hence its application and repayment deadline extensions, eligibility criteria expansions and financial support increases.
"As EDC works with Canadian exporters, many of whom are small-sized companies, we are sensitive to the situation some of them are facing as a result of the pandemic," the statement says.
As the country approaches the next federal election, Mallough says small businesses and the CFIB will be looking for what support each party plans to implement for the sector.
"I think that our focus for all parties is: what are you doing to make the business and climate in Canada better? What are you doing to help lower taxes, to help with labour mobility, to address skilled workers challenges?" he said.
Regardless of the election's outcome, Reid recommends shopping locally.
"In another 10 to 15 years, your children won't know what a small independent store is. They'll be nonexistent because it's becoming more and more difficult for us to survive," she said.
Girotti, meanwhile, says her own children are likely "terrified" by the prospect of opening their own business.
"I employ 54 awesome people," Girroti said. "And it scares me daily that something like this could happen again."
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