Running a business can be demanding and challenging, especially in the aftermath of a global pandemic. Ivan Gedz, owner of Union Local 613, a restaurant in Downtown Ottawa, understands this all too well. To alleviate the financial strain caused by the pandemic, Gedz is hoping that Ottawa Pride, taking place in late August, will help his business bounce back. In normal circumstances, he wouldn’t rely on a single event, but given the current financial situation, he has had to make tough decisions when it comes to purchasing supplies to maintain cash flow.
Like many other businesses, Union Local 613 is far from recovered from the effects of COVID-19. Gedz estimates that the overall revenue has decreased by around 25 to 30 percent. The business has taken out a Canadian Emergency Business Account (CEBA) loan, along with nearly 900,000 other businesses. Initially, these loans were interest-free with a cap of $40,000, but due to the prolonged pandemic and ongoing restrictions, an extension of $20,000 was offered. If businesses repay up to $40,000 of the loan by December 31, $20,000 will be forgiven. However, if they are unable to do so, they will be responsible for repaying the loan with a five percent interest rate over the next two years.
Gedz acknowledges that paying back the loan in the current business climate is a challenge. He has also personally injected significant funds into the business and has not paid himself for the past five months. The rising costs of doing business, particularly from suppliers, have further compounded the recovery process.
Gedz is not alone in facing these difficulties. The Canadian Federation of Independent Business (CFIB) conducted a poll among its members and found that 43 percent of them will not be able to repay their CEBA loans by the year-end deadline. Another 47 percent stated that while they will be able to pay, it will be a significant struggle. In response to this, the CFIB has written to the government requesting a one-to-two-year extension on the repayment deadline.
The terms for the CEBA loan repayment are final and approaching soon, as stated on the government’s webpage. Although the government has already offered a one-year extension, this has provided little solace to small business owners like Marc Langelier, an Orangetheory Fitness franchisee based in Ottawa. Langelier opened his location in late 2020 and is uncertain about how to repay his loan.
While inflation may be stabilizing, food prices remain high. Gedz is keeping Union Local 613 open for a few more months, but the outlook is grim. He plans to push through until spring, even if it means leveraging his personal home. However, this comes with its fair share of stress and sleepless nights.
Overall, the road to recovery for businesses like Union Local 613 is steep, and the repayment of loans adds to the financial burden. Small business owners are hoping for an extension on the deadline to repay their CEBA loans, giving them more time to recover and rebuild.
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