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Almost one-third of small Saskatchewan businesses were not able to repay the $60,000 Canada Emergency Business Account (CEBA) loan by the Jan. 18 deadline.
Brianna Solberg, the director of the Prairies for the Canadian Federation of Independent Business (CFIB), said many businesses are in a position to make tough financial decisions.
“All business owners knew that these loans would be due back eventually,” said Solberg. “Many of them did not suspect that come 2023, they would actually be worse off than they were at the height of the (COVID-19) pandemic.
“In many cases, it’s harder now just because every line items in their budgets have increased, from food to fuel, rent (or) utilities. You name it, it’s more expensive.”
Around 29,000 Saskatchewan small businesses took out CEBA loans, costing $1.6 billion. According to CFIB data, only half of those business owners were able to repay by Jan. 18 deadline on their own.
Another 20 per cent repaid by borrowing from their financial institution. The other 30 per cent were not able to repay their loans.
If business owners paid two-thirds or $40,000 of their loan by the Jan. 18 deadline, $20,000 would have been forgiven.
CFIB surveys found 19 per cent of small businesses in Saskatchewan are considering closing the doors.
Solberg said businesses owners that did manage to pay off the loan will still need to jump through many hoops to keep their doors open.
“They are just drowning in all these increased costs and it’s just not hard to imagine that many of them find it difficult to see a future for their business, one in which they recover and survive,” she said. “In some cases, it’s just easier to close their doors.”
Many small businesses in the province struggled to make the deadline. Some of those that did are still facing financial strain.
In September, there was some frustration from business owners when the federal government extended the loan deadline for an extra 18 days. Solberg said many of these businesses would have loved to see the loan extended until the end of 2024.
In some cases, Solberg has heard of instances of people remortgaging their homes to pay off their loan.
Solberg said that in 2023, the business insolvency rate was 41 per cent higher than the year before, making it the highest it has been in more than 13 years. Even before the Jan. 18 deadline, Solberg had heard of many insolvencies taking place.
The carbon tax is slated to increase on April 1, which Solberg said was a “significant pain point” for many small businesses. The CFIB is calling on the federal government to halt tax increases, and the provincial government to freeze the small business tax at one per cent.
— With files from 980 CJME’s Roman Hayter
