CEBA loan repayment deadline puts pressure on small Manitoba businesses just ‘getting our feet back under us’

CEBA loan repayment deadline puts pressure on small Manitoba businesses just ‘getting our feet back under us’

Some small business owners in southwestern Manitoba say they’re struggling to balance repaying loans given by the government to help them through COVID-19 lockdowns, while still recovering from lingering pandemic economic pains.

Shaun Fjeldsted, who co-owns the BloomBox flower shop in Brandon with his wife, Trish, is among the business owners across Canada who say they’re feeling the pinch of a Jan. 18 deadline to repay loans they got through the Canada Emergency Business Account, or CEBA.

“Another year for us probably would have been ideal,” Fjeldsted said.

“We’re just kind of getting our feet back under us.… It would have given us a chance to stabilize and get back to more normal business.”

CEBA, launched in April 2020 to help Canadian small businesses during the COVID-19 pandemic, offered zero-interest loans of up to $60,000. Up to $20,000 would be forgiven if the rest was repaid by a certain date.

Last September, the government granted an extension to that deadline, moving it from Dec. 31, 2023, to Jan. 18, 2024. If businesses make a refinancing application before Jan. 18 with the financial institution that provided their CEBA loan, the deadline moves to March 28.

After the deadline, the loans will start accruing five per cent interest.

The repayments and interest rate could be devastating for small entrepreneurs, Fjeldsted said.

CEBA is “going to hurt us more than it’s going to help us, I think, in the end,” he said.

WATCH | Businesses face pressure of CEBA loan repayment:

Manitoba businesses face pressure of CEBA loan repayment

Brandon’s Shaun Fjeldsted, co-owner of the BloomBox flower shop, and Erin Wells, general manager of the Dock On Princess, talk about the challenges they’ve faced in repaying their Canada emergency business account loans as they continue to recover financially from the COVID-19 pandemic.

Consumers still ‘tightening their belt’

The BloomBox received $60,000 in loans and waited almost a year before spending them. It’s been hard to make enough to pay the loans back because of rising operating costs in an economic environment that’s still hard for many businesses, Fjeldsted said.

“Everybody’s kind of tightening their belt and not spending. So when you sell a luxury product like we do, that definitely poses some problems,” he said.

The BloomBox ended up taking a bank loan to repay the CEBA loan. Fjeldsted isn’t happy about that, but said it felt like there was no other choice.

An orange flag hangs outside a business with a neon "open" sign in its window.
An August 2020 photo shows an orange flag outside a Brandon business, as some businesses reintroduced restrictions to try to contain the spread of COVID-19. The president of the Brandon Chamber of Commerce says some businesses took out other loans, on top of CEBA loans, to get through pandemic restrictions, which they’re now struggling to repay. (Riley Laychuk/CBC)

The repayment deadline has “certainly has caused a lot of stress amongst businesses,” said Jamie Pugh, president of the Brandon Chamber of Commerce.

That’s “partly because people had taken out other loans, other than the CEBA, to get them through the pandemic,” she said.

Some businesses struggling with the repayment are now working with their financial institutions to find ways to repay their loans, including remortgaging and adjusting their budgets.

The loans are putting a strain on cash flow — the largest concern for businesses, said Pugh.

Businesses still face uncertainty 

Fjeldsted also said the unpredictability of cash flow has been a major challenge for his business.

“I used to be able to predict within a couple thousand dollars what my sales would be any month,” Fjeldsted said. “Now, that could range from up 50 per cent to down 50 per cent.”

Following last September’s extension, there were calls to extend the CEBA repayment deadline again.

Erin Wells, general manager at the Brandon restaurant the Dock On Princess, says the business held out on fully paying off its CEBA loan until it was clear no extension was coming.

Wells says the Dock was lucky it was able to repay the loan, but thinks other businesses might not be — especially those running on a smaller scale.

“If you took that money … to pay your everyday expenses and to keep going, you could easily not have that money to pay back now,” Wells said. “I do think we’ll see people that have to close, which is really unfortunate.”

A woman sits at a bar.
Erin Wells, general manager of the Dock in Brandon, says the lingering uncertainty created by the COVID-19 pandemic and rising costs have made it hard for businesses like her restaurant to recover. (Chelsea Kemp/CBC)

Even so, the Dock is still adapting to the new economic landscape, Wells said.

It’s hard to predict things like what a busy night will look like, or how much a food order for the restaurant will cost, she said.

For example, a roughly five-kilogram case of tomatoes used to cost around $60. Now it’s $138.

That makes keeping menu prices level “a real balancing act,” said Wells.

“We don’t want to make things too expensive, but then … we can’t be losing money on things.”

Wells says the money local businesses make goes back into the local community. Her restaurant has about 40 people on its payroll.

While some government grants and subsidies throughout the pandemic have helped businesses survive, local support is still essential, she said.

A man and woman stand in a flower shop.
Businesses, whether small or large, are ‘all in the same boat’ and need local support to keep going, says Trish Fjeldsted. (Chelsea Kemp/CBC)

BloomBox co-owner Trish Fjeldsted agrees, and says her business has an emphasis on selling local items.

“We’re all in the same boat,” she said. 

“I feel like even the larger businesses, smaller businesses — it affects you on a different scale, but it’s the same story over and over again, and it’s not good.”