Border duty free shops call for complete forgiveness of pandemic loans

Border duty free stores are calling on the federal government to completely forgive loans from a government program they took out during the COVID-19 pandemic, arguing the pandemic disproportionately affected them and that border traffic has not returned to pre-pandemic levels.

At a news conference Thursday morning, Barbara Barrett, the executive director of the Frontier Duty Free Association (FDFA) — which represents 32 land border duty free stores in Canada — called for the government to waive its Canada Emergency Business Account (CEBA) loans to FDFA members. CEBA provided eligible small businesses and not-for-profits with interest-free loans of up to $60,000.

Barrett said the demand is a matter of fairness.

"It is unreasonable for the government that put our stores in the position of requiring the debt, to expect repayment when the stores have yet to recover from the long-lasting impact of the government's handling of the border," she said.

"We did our part to keep Canadians safe at the land border, and it seems a moral imperative for the federal government to acknowledge that, and forgive our stores the CEBA loan."

The federal government first restricted access along the Canada-U.S. border in response to the pandemic in March 2020. Barrett said FDFA considered the border fully reopened in May 2023, when the United States dropped its requirement for proof of vaccination.

But, she said, an FDFA analysis found duty free sales are down 33 per cent compared to pre-pandemic levels.

"Our stores had no way to pivot business during the border closure, and we continue to bear the brunt of these long-lasting impacts," Barrett said.

"We were really hoping to see the floodgates of Americans and Canadians going over the border, and that's just not what's happening."

Barrett said duty free stores in remote locations are having a harder time recovering than those at busier crossings, and that some stores may not survive without loan forgiveness.

The FDFA is also calling on the newly-appointed tourism minister, Soraya Martinez Ferrada, to work on boosting American tourism to Canada.

Calls grow for loan relief

The demand for loan forgiveness comes as small businesses across the country are asking for relief on their CEBA loans. The government has offered to forgive up to 33 per cent of the loan ($20,000) for borrowers that pay by Dec. 31, 2023, but the Canadian Federation of Independent Business (CFIB) has asked the government to extend the deadline to the end of December 2025 or at least 2024. 

If a business cannot pay back the loan this year, they'll have another two years to pay — but without the partial loan forgiveness.

"We're not asking for total loan forgiveness — just more time,"  Corinne Pohlmann, CFIB's executive vice-president, said in a statement earlier this week.

"If businesses are forced to close because of their pandemic debt, government will not be able to recoup that money. It's a win-win situation if businesses are allowed more time to repay."

The Tourism Industry Association of Canada (TIAC) is also calling for loan relief. Last month, it sent a letter along with other industry associations, including CFIB, to deputy prime minister and finance minister Chrystia Freeland asking for an extension.

Marc Séguin, the vice-president of policy and government affairs with TIAC, said inflation, rising operational costs and higher interest rates are putting financial pressure on businesses while they're on the hook for pandemic loans.

"These all add [up] to increased costs at a time when revenues have not come back to where they were pre-pandemic," he said.

TIAC has not received a response to the letter, but Séguin expressed optimism businesses could get an extension. 

"I think there's an opportunity here for a dialogue with government to see what we can do to extend the term of the loans, to ensure that people get in a stronger, better position to repay those loans," he said.

But the federal government has given no indication so far that it's going to forgive the loans or extend the deadline. The government had already extended the deadline from the previous one of Dec. 31, 2022.

"When the COVID-19 pandemic hit, the federal government acted swiftly to provide emergency support and ensure that Canadians and Canadian businesses could weather the storm," Katherine Cuplinskas, a spokesperson for Freeland, said in an email statement.

"To continue helping those hardest-hit by the pandemic, we announced that the CEBA repayment deadline was extended by one year to December 31, 2023."

Cuplinskas said CEBA delivered over $49 billion to 890,000 small businesses and non-profits in Canada.

Last month, NDP Leader Jagmeet Singh called on the government to extend the CEBA repayment deadline.