Small businesses struggling to pay off federal COVID loan

The federal government may have extended a COVID loan deadline for small businesses, but advocates and owners say there’s still trouble on the horizon.

That’s because they’ve been given just 18 more days to pay. And if they don’t, they could be on the hook for thousands more.

Small businesses and advocates have been pushing for an extension for quite some time now, but were hoping for much more than 18 days.

They say that’s simply not enough time, and as many as one in five small businesses across the country are at risk of shuttering if it’s not extended further.

READ MORE: Small businesses in Canada continue to suffer

Vince Hoffman has owned Freewheel Cycle in Dundas for more than 30 years. He says after a good, but unstable year of business, he was hoping for a bit more time to repay the $60,000 loan he got from the government at the height of pandemic closures.

“Yeah sorry, I’m not like ‘Oh wow two and a half more weeks to pay!’ yeah no, that wasn’t the news we were hoping for,” Hoffman said.

He says that’s because it’s been a strange year for retail.

“We had huge outstanding back orders during COVID, and then suddenly it all came,” Hoffman said.

“For me, even though I had a good year, instead of having a pile of cash in the bank, I have a pile of inventory. And you’re not paying back your CEBA loans with small and extra large sized bikes in not great colours, you know, the stuff you were stuck with.”

The feds offered small businesses loans of up to $60,000, saying that if the rest was paid off by the deadline, they would forgive $20,000 of it.

Yesterday, they announced that instead of paying back by the end of the year, most businesses have until Jan. 18 to pay up if they want that $20,000 forgiven.

They also extended the deadline to pay in full — with no forgiveness — to the end of 2026.

READ MORE: Over 15,000 businesses apply for Ontario support grants

As businesses continue to be hampered by supply chain issues, inflation and rising interest rates, owners are asking for more time.

According to the Canadian Federation of Independent Business (CFIB), around 250,000 small businesses across the country are in danger of closing their doors if the forgiveness deadline isn’t extended.

“We know that small businesses across the country, and business associations like ourselves, have been putting a tremendous amount of pressure on the government to give an extension. And ultimately seeing the important deadline, which is the forgivable portion deadline, only extended to mid January, is really disappointing and really won’t move the needle for most small businesses,” Ryan Mallough from the CFIB said.

“About 70 per cent still haven’t paid anything off on the CEBA loan, and within that, I believe 40 per cent are quite nervous about what that means for them.”

Chambers of commerce across the country and the CFIB say they will continue to push for a further extension of the loan forgiveness deadline.

They say the end of 2024 or even 2025 would give businesses a fighting chance.