Deadline for pandemic business loans approaching, leaving some owners scrambling for funds

Many small and medium-sized businesses took out government loans during the pandemic, and now the deadline to repay them is just weeks away.

Lafayette Restaurant, across from Papineau metro station in Montreal, is one of the hundreds of businesses that took out a CEBA (Canada Emergency Business Account) loan during the pandemic to stay afloat.

"We took it and we started paying it off a year-and-a-half ago," said co-owner Billy Gogas. "Like $1,500 a month, whatever we could scramble up, we'd pay it off."

Small businesses like Lafayette have just a few weeks left if they want to access the forgivable portion of the loan.

If a business borrowed $60,000 and pays back $40,000 by Jan. 18, the remaining $20,000 is forgiven.

For those who took out $40,000, if they pay back $30,000 by the deadline, the rest is forgiven.

For Lafayette's owners, it was not always easy coming up with the money.

"There has been moments where we couldn't take a pay in order to make ends meet," said Gogos.

The Canadian Federation of Independent Businesses (CFIB) says that nearly a quarter of those who borrowed money won't be able to pay back the loan by January.

"For those that are not able to get that forgiveable portion, they're going to have to make some tough decisions ahead," said Ryan Mallouch, the CFIB's vice-president of communications. "And whether or not that's stay open or closed or rethink expansion, rethink other investments, it is going to weigh."

The federal government has twice pushed back the deadline and businesses that can't pay back the loan by January have two options: refinance through a bank or get the loans converted into another three-year loan at five per cent interest.

In a statement, a spokesperson for Canadian Finance Minister Chrystia Freeland said: "Small businesses that do not have the funds to repay a CEBA loan, now have three years to repay it in full."

Ottawa said that CEBA delivered more than $49 billion to nearly 900,000 small businesses and non-profits.

At La Mie Matinale Bakery in Montreal's Village, owner Regis Menetrey just paid back his CEBA loan.

"I had to dip into my own funds to pay it back," he said.

Menetrey added that the busy holiday season helped his business, but he's worried about the coming quiet months ahead.

The CFIB wants Ottawa to extend the CEBA deadline to the end of 2024 to give businesses a little more time to bounce back from the pandemic.