'A lot of people are scared’: CEBA loan deadline weighs on Calgary small business owners

Many are bracing for the upcoming deadline to repay their Jan. 18 CEBA loans, a pandemic-era lifeline

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David Sturies will have to make some tough financial decisions over the next week.

Less than a week before the deadline to repay his Canada Emergency Business Account (CEBA) loan, the owner of Lil’ Empire Burger — which has three locations in Calgary — and Empire Provisions is weighing his options.

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“We’re contemplating if we can repay it or not in time,” Sturies said Thursday. “It’s not a fun thing to think about. It’s weighing on all our minds, that’s for sure.”

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Many Calgary and Alberta small businesses are bracing for the Jan. 18 deadline to repay their CEBA loans, a pandemic-era lifeline that offered up to $60,000 to small businesses and not-for-profits. If small businesses repay $40,000 of that loan by next week’s deadline, which has already been pushed back by more than a year from the original deadline, the additional $20,000 will be forgiven.

With that $40,000 bill coming due, the federal government offers a few options for businesses that can’t make it. The first scenario allows businesses to work with their bank to refinance the loan, in which case the federal government will honour the $20,000 loan forgiveness.

Door 2, which Sturies expects he will have to open for Empire Provisions, is to convert the full $60,000 loan into a three-year loan at five per cent interest, due in full by December 2026.

The deadline is putting Sturies and a number of other Calgary businesses in a pinch after four years of grappling with pandemic closures, lower consumer spending, high utilities costs and overall cost increases.

“A lot of people are scared, a lot of people are stressed out,” said Sturies, who was able to pay off his CEBA loan for Lil’ Empire Burger.

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Holiday spending lower than expected

Retail businesses hoped holiday spending would cover a bulk of the change needed to cover their repayments, Deborah Yedlin, president and CEO of the Calgary Chamber of Commerce, said in an interview.

But holiday spending ended up 20 per cent lower than expected, she said.

“I think a lot of companies were expecting to make up that delta — that they would be able to apply to the CEBA loan repayment over the holiday season,” Yedlin said.

Data compiled by the Canadian Federation of Independent Business (CFIB) found last October that seven in 10 CEBA borrowers hadn’t started repaying their loans.

Because there weren’t penalties or benefits to repaying early, that number is expected to skyrocket over the coming weeks, said Katherine Cuplinskas, senior communications adviser for the federal finance minister. As of August 2023, one-fifth of CEBA recipients had repaid their loans in full, she said.

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Cuplinskas said the flexibility beyond Jan. 18 is “significant support for small businesses who might be struggling to make ends meet.”

Times are particularly tricky for the hospitality industry, known for its slim margins. A recent survey conducted by the Alberta Hospitality Association found 80 per cent of its members had “deep concern” over the repayments.

Meanwhile, a survey by Restaurants Canada found one in five restaurants with a CEBA loan are on the brink of closing one or more locations. That data also found 53 per cent of food service operators are operating at a loss or barely breaking even — a number that was in the low teens before COVID-19.

‘There’s gonna be some closures’

Ed Donszelmann, owner of OTTO food and drink in Edmonton, said he’s “one of the lucky ones” who will be able to pay off the loan — he’s officially paying it off Tuesday — but was forced to dip into his personal savings to cover it.

He said that when pandemic restrictions lifted, restaurants were optimistic some of the money saved over the previous year would be used for dining. But as inflation climbed and costs rose for those businesses, margins have stayed dangerously low.

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“With all the federal government and provincial government support — that’s the only reason that we survived,” Donszelmann said. “My business, it’s barely just keeping afloat and I’m not paying myself a whole lot.”

Jeff Jamieson from Donna Mac
Jeff Jamieson, owner of Donna Mac, says restaurant owners are still dealing with the effects of COVID-19. Darren Makowichuk/Postmedia

Jeff Jamieson, founding board member of the Alberta Hospitality Association (AHA) and owner of Calgary’s Donna Mac restaurant, said it’s been one battle — and cost — after the other since the beginning of COVID-19.

“There’s gonna be some closures,” he said. “There’s gonna be some people that just decide that additional burden puts them over the edge and it doesn’t make sense anymore to carry on.”

Calgary’s downtown remains in deep recovery from the pandemic and could use more time to get back on its feet, said Mark Garner, executive director of the Calgary Downtown Association. Four million people travelled through Stephen Avenue in 2023 he said — the most since 2019 — but overall downtown foot traffic remains way down, a key indicator of downtown businesses’ health.

“Office occupancy — just the number of employees back in the neighbourhood — is still not back to that 2019 number,” Garner said.

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Meanwhile, rural mom-and-pop operations are likely to be the most hard-hit by current conditions because they have smaller populations to benefit from, said Mona Pinder, owner of Mona’s Table and executive director of AHA.

As more local businesses head for the doors, Jamieson added, larger conglomerates will likely fill the spaces, reducing the number of family-owned shops.

“I think culturally it’s a disaster,” Jamieson said.

For Sturies, uncertainty around when the loan would be due, which was officially settled in September when the final two-week extension was announced, has made it hard to plan for what’s next. It amounts to another level of stress for business owners.

“Owning a small business is stressful enough, and having this weighing on your conscience, it’s just a lot more.”

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X: @mattscace67

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