TORONTO — With the Canada Emergency Business Account (CEBA) loan reimbursement deadline approaching, Restaurants Canada is calling on the federal government to adopt a 36-month payback extension, with a scale-down model on the forgivable portion. This could save thousands of restaurants and other small businesses from declaring bankruptcy in the future.
The CEBA program provided small businesses and not-for-profits interest-free loans of up to $60,000 to keep doors open and soften the financial blow. To ensure that the foodservice sector continues to play a major role in a strong economic recovery, Restaurants Canada’s outlined its recommendations in the Federal Pre-Budget Submission 2023.
The extension along with the scale-down model will offer more time for the government to see the CEBA loans reimbursed and encourage businesses, and specifically restaurants, to reimburse their CEBA loans as soon as possible in order to benefit from a larger forgivable portion.
According to key findings on the restaurant sector’s use of CEBA loans, 83 per cent of table-service restaurant companies and 56 per cent of quick-service restaurant companies received a loan through CEBA and the majority of restaurant operators required these loans to keep staff employed (77 per cent); to pay for utilities (65 per cent); goods from supplies (62 per cent); and rent (61 per cent).
“The program was a key tool to assist thousands of businesses who had begun waiving their white flag as a result of the pandemic. Without the CEBA program, Canada’s loss of 13,000-plus foodservice establishments would have been exponentially larger. However, coming out of the pandemic, restaurant operators across the country are still struggling to keep their businesses afloat. For that reason, we are calling on the federal government to adopt our recommendation to implement a phased loan repayment approach for CEBA,” says Olivier Bourbeau, VP, Federal & Quebec Affairs. “The inability of some restaurateurs to pay back these loans is a reflection of the state of our industry as a whole. Our sector emerged from the pandemic as one of the hardest hit financially, with many owners being forced to take on significant debt just to keep their doors open. The industry is also struggling with a number of post-pandemic operational challenges like inflation, labour shortages and supply chain hurdles – all of which are significantly impacting the profitability of these businesses.”