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Some St. Albert businesses struggling with COVID loan repayments

Interest-free deadline has passed, leaving some borrowers in dire financial straits

Some St. Albert businesses are in crisis now the Jan. 18 deadline to pay back their Canada Emergency Business Account (CEBA) loans without interest has passed.

Through CEBA, the federal government offered up to $60,000 for cash-strapped businesses to weather the impacts of COVID-19. Business could keep up to $20,000 of that money if they paid the loan back before Jan. 18, 2024. But businesses that did not meet the deadline now face a five per cent interest rate on the loan and have three years to pay in full.

Michael Cooper, member of Parliament for St. Albert-Edmonton, said a number of small businesses told his office they may not be able to repay.

“CEBA was a necessary program, and what the government now needs to do is work to support small businesses who are struggling, rather than punishing them,” Cooper said.

Conservatives called upon Justin Trudeau’s Liberals to extend the deadline to December 2024, but the government remained firm on the repayment date. The deadline had already been extended twice.

Cooper believes nearly all businesses have been struggling because of high commercial rent prices, payroll and carbon tax increases and “Liberal red tape.”

“It’s another penalty being layered on to small businesses,” he said.

Roughly a quarter of small businesses in Alberta that received the loans felt they would not be able to meet the Jan. 18 deadline, according to the Canadian Federation of Independent Business (CFIB).

The CFIB also found that around 50 per cent of small businesses are making below-normal sales.

The Gazette reached out to several businesses in the city, though few were willing to discuss the loans. No one who received the loan was willing to use their name or identify their business for this story.

A local restaurant owner said she wishes she never took the loan. At the time she felt it was the only way her business, which had to close in-person dining, would survive. She received the full $60,000.

“The past month, I'm like, ‘Oh, God, where did that money go?’” she said.

She believed once COVID-19 restrictions ended, the economy would return to normal and so would business. But she said things have become even worse.

“After COVID there was the inflation, and then groceries going up, then utilities, everything, everything,” she said. “I don't know what I'm going to do now, to be honest with you. I'm so confused. And I'm so stressed out.”

Now, she is not only running her kitchen and working as a cook, but also managing all of the administrative work behind the business while trying to support her family largely on her own.

It’s unfair that some larger businesses that perhaps did not need the loans have reaped an up to $20,000 reward, she said

She’s not sure how, or if, she’ll ever be able to pay back the loan.

“I can’t put aside anything,” she said. “I’m barely managing my bills … sometimes I don't have a cheque for myself.”

She said she knows many St. Albert restaurant owners who took the loans and are in the same position.

Mike Howes, owner of DKI Sparklean Restoration, said he didn't take the loan, even though other business owners suggested to him that it would be a good deal.

“I just refused to do it because we weren't suffering,” he said.

He said he’s happy with the decision, and feels many businesses that chose to take the loans did not need the money.

“A lot of them took the loan because they're out to make a killing, not a living,” he said. “And it affects us all as taxpayers, because it's all of us as taxpayers that pay this.”

Shelly Nichol, executive director of the St. Albert and District Chamber of Commerce, said the chamber’s board did not take a position on whether the CEBA loans should be extended. But she does understand the predicament many businesses face.

“Everybody thought we'd come out of COVID, and everybody would be spending money like the roaring '20s,” she said. “What happened was, we still had supply chain issues, then we got high interest rates. All of these things happened that nobody could predict.”

Businesses that failed to repay the loans do have some options. Some financial institutions are willing to refinance the loans for businesses they deem likely to repay.

Over 885,000 Canadian small businesses and not-for-profits received CEBA loans.

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