Small biz owner predicts ‘chaos’ after CEBA loan repayment deadline

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The owner of an environmentally-friendly general store in eastern Ontario pulled out all the stops to repay her CEBA (Canada Emergency Business Account) loan in time for Thursday’s deadline.

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Laurie Davey-Quantick, who’s owned Verde in downtown Kingston, Ont., since 2011, says she began a 40% off sale on Dec. 27 which helped her pay back $40,000 to the government and ensured she qualified for a  forgivable component of the loan, which amounted to $20,000.

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That doesn’t mean, however, it’s all smooth sailing, as she will close her brick-and-mortar store on Jan. 27 to become an online retailer.

“I happen to have a location on my home property that will receive all of my inventory,” said Davey-Quantick on Wednesday.

“And in three or four months, we’ll start to think about whether we want to open a destination store, but we don’t know yet.”

Almost 900,000 businesses and non-profits received a CEBA loan during the COVID-19 pandemic, securing up to $60,000 in interest-free loans — with a forgivable component — to help them survive. Those who took the full amount will be forgiven $20,000 if they paid $40,000 on Thursday.

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The Canadian Federation of Independent Business predicted thousands of small businesses will miss the deadline, driving up the amount they owe from $40,0000 to $60,000.

If they can’t repay $40,000 by Thursday, their entire debt will be converted into a three-year loan, with 5% annual interest.

“I believe the government will regret the decision to not grant more time as small businesses fail and default on their entire loan,” said CFIB president Dan Kelly in a statement.

“For many businesses, CEBA will be the straw that breaks the camel’s back.”

Davey-Quantick agreed, predicting “impending chaos. And I’ve been saying that for two years now.”

She said, in a perfect world, small businesses would have been forgiven $40,000 by Ottawa and only required to pay back $20,000, with a deadline extension until the end of 2025.

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“The economy has not rebounded the way the policy makers (think),” she said. “They all believe we’re going gangbusters — but we’re not. The small businesses that I know are desperately trying to cobble together the money to pay back that $40,000 so that they can have that $20,000 forgiven. But that means many are going to be dipping into any personal finances that they have; they might have to go to family, or they might have to go to their banks.”

Davey-Quantick added her bank was quoting a lending rate of 12.5% interest over two years if she hadn’t been able to make the repayment.

“So that works out to about a $2,000 per month expense,” she said.

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