Most Surrey businesses that received up to $60,000 in Canada Emergency Business Account (CEBA) loans during the COVID-19 pandemic are struggling to pay the money back by the federal government's Jan. 18 deadline, according to a survey that the Surrey Board of Trade (SBOT) released this morning.
The loans were attractive not only because they were interest-free, but also because business owners were told that if they repaid $40,000 of their loans by Dec. 31, 2022, that they would be able to keep the remainder as a gift. The government then extended that deadline to Dec. 31, 2023, and then once again, to Jan. 18.
SBOT sent its approximately 6,000 members the survey Jan. 9, and about 10 per cent sent back voluntarily responses, said SBOT policy and research manager Jasroop Gosal, who told BIV he was in charge of compiling a report yesterday.
The result of the responses, he said, is that the report is a "snapshot," and is not necessarily representative of all businesses.
Of those who responded, 75 per cent said that they received a CEBA loan, and 60 per cent of those recipients said that they had "challenges" paying back the loans.
Of the respondents who received CEBA loans, 20 per cent told the SBOT that they had to cut their workforces in order to try to generate the capital needed to repay the loans, according to the report. Another five per cent of that group said that they had to either raise prices or scale down their businesses to be able to generate the money to pay back the loans, while five per cent closed their business, the report said.
Entrepreneurs in the retail and restaurant sectors have so far been the most vocal in urging the federal government to extend the repayment deadline.
BC Restaurant and Foodservices Association CEO Ian Tostenson if the federal government does not extend its deadline for repaying interest-free CEBA loans made during the pandemic.
Many restaurant and retail business owners, however, are not members of the SBOT.
The survey hints, however, that despair over repaying CEBA loans is spread across a wide swath of business sectors.
The largest slices of respondents to the SBOT survey, at 20-per-cent each, were grouped into two categories: professional, scientific and technical services and, separately, real estate, rental and leasing. The survey did not break down the CEBA recipients by job category so it is impossible to say in which sectors the loan recipients were grouped.
One insight is that 86.6 per cent of those who received the loans have started the repayment process.
The SBOT asked respondents whether they are required to pay back the full loan on Jan. 18, which is a universal requirement of anyone who took out a CEBA loan. It found that 66.6 per cent of respondents said that they did have to pay the loan back by that date.
The only two ways that a business would not have to pay back the loan by that date is if the business had already paid back the full loan, or if the business has already initiated a full-repayment process with the original bank that the business took out the loan. In those situations, the business will be given until March 28 to pay back the loan and be eligible for loan forgiveness.
Gosal said that business owners may have answered that they did not have to pay back the full loan by Jan. 18 if they had taken out a separate loan from a bank that would cover the CEBA loan.
