Looming COVID-19 loan repayment deadline has some small businesses worried about staying afloat

With the deadline to repay a federal government COVID-19 loan looming, the owners of some small businesses in Manitoba are worrying about their future.

The Canadian Federation of Independent Business says approximately 90 per cent of small businesses in the province took out loans through the Canada Emergency Business Account, also known as CEBA.

The federal program, meant to offset losses caused by the pandemic, offered zero-interest loans of up to $60,000. As much as one-third of those loans — up to $20,000 — would be forgiven if the remainder was repaid before Dec. 31, 2023.

But a lot of business owners aren't sure they will be able to repay on time, according to Brianna Solberg, the CFIB's director for Manitoba, Saskatchewan and the North.

"For those who are at risk of missing this deadline, that's extremely stressful because many of them have banked on this $20,000 just to keep themselves afloat," Solberg said. "It's definitely causing a lot of stress and anxiety."

That's why CFIB is calling on the federal government to extend the repayment deadline by at least one year, increase the debt forgiveness amount to 50 per cent, and create an appeal process for those who received a loan but were later deemed ineligible.

"Those businesses that fought three hard years to survive the pandemic are still facing significant challenges on their road to recovery," said Solberg.

Since it was launched in April 2020, shortly after the start of the pandemic, the CEBA program approved about 898,000 businesses for loans, according to its website. 

In Manitoba, Solberg says 88 per cent of businesses that received a CEBA loan still have yet to repay it in full. She adds 42 per cent are worried about meeting the deadline, which means some businesses might not be able to survive.

"There's just not a lot of extra wiggle room in their budgets to be able to … afford to stay open," she said.

Businesses that were hit the hardest during the pandemic — those in the hospitality, retail and social services sectors —are most at risk of not being able to repay on time, Solberg said.

Companies with zero to four employees are also especially at risk.

"All of their costs are going up at the same time right now — you know, they've seen fuel and energy costs, wage costs, food, rent, utilities, insurance, you name it," Solberg said.

When asked about CFIB's recommendations, Adrienne Vaupshas, press secretary for federal Finance Minister Chrystia Freeland, wouldn't say if the Liberal government is considering any of them. In an email to CBC News, she did note that the repayment deadline to qualify for loan forgiveness has been extended once — from Dec. 31, 2022, to Dec. 31, 2023.

Business owner deemed ineligible wants to appeal

Alan Isaacson is one of the many Manitoba business owners who, according to Solberg, received a CEBA loan but was later told he'll have to pay it all back.

"Two years to be corrected, like at the last minute, when you have no recourse and you're not allowed to appeal? That's a little, you know, unfair," said Isaacson, the sole proprietor of Isaacson Financial, through which he sells insurance and securities.

Isaacson received a $40,000 CEBA loan in June or July 2020, he said. He was initially told he'd have to pay 75 per cent of it back by Dec. 31, 2022. But two years later, he was told he didn't qualify and would have to repay the full amount.

"That's a significant amount of money for a small business," he said.

Solberg said about two to three per cent of Manitoba businesses who took about a loan were later found ineligible.

"I was told. 'Well, you never should have qualified for that, but you might have qualified for other stuff, but we're sorry,'" Isaacson said.

Most of the money Isaacson's company makes comes from new business out of province, so when travel restrictions prevented him from meeting people in person, he said he lost out on a lot of revenue.

"If you can't travel to see people when things were shut down, you can't generate new business," Isaacson said. "So that's where my business lost money."

Isaacson said he doesn't know why he didn't end up qualifying for the loan, and the government wasn't able to help him navigate the application process or explain why he wasn't eligible.

"They weren't able to tell you, you know, 'this is not going to qualify you,'" he said.

Isaacson will be able to repay the loan, but he wants the opportunity to plead his case.

"Give me a chance to say, 'Hey, you know, here's what happened. Look at my business. If I didn't qualify for one of the programs, tell me that, but at this point, I think I qualify.'"