Restaurants Canada has called on the federal government to give small businesses more time to pay back their Covid-19-era loans. With the deadline for repayment just seven months away, the organization says struggling restaurants simply won’t be able to pay it all back by the end of the year.
Restaurants Canada is asking for a three-year extension for those who need it.
“Thousands of small independent operators in our industry are at a breaking point as a result of their CEBA debts. That’s why we are calling on the Deputy Prime Minister Chrystia Freeland to take meaningful action by adopting our CEBA repayment proposal to help ensure their survival,” said Olivier Bourbeau, a vice president at Restaurants Canada, in a press release.
Restaurants Canada notes that time is of the essence for the feds to make a decision on CEBA loan repayments. The House of Commons will break for summer on June 23.
CEBA loans were given out by the federal government during the height of Covid-19 restrictions. The money was used to keep businesses afloat during lockdown. Each eligible business and non-profit could get up to $60,000. The loans don’t collect interest if they are repaid by December 31, 2023. Full repayment on time will also result in up to $20,000 being forgiven.
But business did not simply “return to normal” once restrictions ended. According to Restaurants Canada, bankruptcies for restaurants are up 116 per cent since 2022. Half of these businesses are either operating at a loss or just breaking even, and 80 per cent say they are making less profit compared to 2019.
As a whole, the restaurant industry, according to Restaurants Canada, has experienced a 12 per cent drop in economic activity between 2019 and 2022. Inflation has hit the industry particularly hard. Restaurants Canada notes that the wholesale cost of common ingredients such as seafood (11 per cent), chicken (13 per cent), and cooking oil (40 per cent), have all gone up in price by double digits.
“Many of our members are weighing their options to either remain open and continue incurring further debt or close their businesses and file for bankruptcy; a decision on CEBA before the summer season is integral to providing small businesses with predictability,” said Bourbeau.
“For many restaurateurs, the December 31st repayment deadline is simply impossible to meet – which reflects the state of our industry as a whole. Post-pandemic operational challenges like inflation, labour shortages and supply chain hurdles are further diminishing the profitability of these businesses and lengthening the sector’s recovery process entirely.”
Restaurants Canada is hoping for a reply to their proposal by May 31.
Derek Montague is a reporter with Huddle, an Acadia Broadcasting content-sharing partner.
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