The federal government is taking steps to support struggling businesses by extending the repayment deadlines for Canada Emergency Business Account (CEBA) loans. However, Restaurants Canada, an advocacy group for the restaurant and service industry, feels that the extension falls short of what is needed.
Prime Minister Justin Trudeau recently announced that the overall loan repayment deadline would be extended by a year, moving it to December 31, 2026. Unfortunately, the deadline to meet the conditions for the forgiveness grant, which can provide up to $20,000, was only extended by 18 days, from December 31, 2023, to January 18, 2024. This comes after a previous one-year extension in January 2022.
Mark von Schellwitz, the vice president of Restaurants Canada for Western Canada, expressed disappointment in the length of the extension and stated that many businesses in the industry are still struggling. He cited pandemic-related debt, labor shortages, and high inflation as ongoing challenges.
The CEBA program was available from April 9, 2020, to June 30, 2021, and provided interest-free loans of up to $60,000, with partial forgiveness, to nearly 900,000 small businesses and not-for-profit organizations. The federal government has now stated that if CEBA loan holders refinance their loans with the original financial institution by January 18, 2024, they will have until March 28, 2024, to meet the repayment deadline for partial loan forgiveness.
If loans remain outstanding after January 19, 2024, they will convert to three-year term loans with an interest rate of five percent per year. The repayment deadline for these term loans will be extended by an additional year to December 31, 2026.
Restaurants Canada has been advocating for a one-year extension of the interest-free period, but their request has not been granted. The organization emphasizes the importance of allowing restaurants to access the forgivable portion of emergency loans taken out during the pandemic.
A recent Restaurants Canada survey found that 51 percent of restaurants are operating at a loss or barely breaking even, compared to 12 percent pre-pandemic. Schellwitz expressed concerns that many restaurants will struggle to refinance their loans and urged Canadians to support local restaurants.
In conclusion, while the government’s extension of the CEBA loan repayment deadlines is seen as a step in the right direction, Restaurants Canada and the restaurant industry as a whole are still facing significant challenges and are hoping for further support.
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