'Many closures': Sask. business analyst says many still struggling to pay back pandemic loan

CEBA loan repayments affect Saskatchewan businesses Senior policy analyst Brianna Solberg speaks about the new data showing the effects on Saskatchewan businesses of repaying CEBA loans.

Following the Jan. 18 deadline for small businesses to pay back the Canada Emergency Business Account (CEBA) many small businesses in Saskatchewan are still trying to navigate how to make that possible.

The Canada Emergency Business Account (CEBA) loan was an emergency payment offered to small businesses during the pandemic, it provided up to $60,000.

If the loan was paid by the Jan. 18 deadline up to one-third could have been forgiven, otherwise the debt converted into a three-year loan with five per cent annual interest.

A total of 29,000 small businesses in Saskatchewan took out a CEBA loan, according to Brianna Solberg, a senior policy analyst with the Canadian Federation of Independent Business (CFIB).

Solberg said about half of those businesses were able to pay the money back in time on their own.

“There was 20 per cent of businesses that were able to repay by refinancing with their bank and the rest either weren’t able to repay or are still trying to figure out financing,” Solberg said.

Luckily for those businesses, they were given until March 28 to refinance the loan with a financial institution and still be eligible for partial forgiveness from Ottawa.

“There’s thousands of businesses that are still in debt and some at viciously high interest rates of eight, nine or 10 per cent and it’s at a time when they can’t really afford it,” Solberg said.

According to Solberg, business insolvencies have started to rise and the curve could become even steeper.

In 2023, the business insolvency rate increased by 41 per cent compared with 2022, according to Solberg.

That was the highest rate seen in 13 years, Solberg said.

“And that is just the tip of the iceberg we know that many businesses will simply close their doors without filing for bankruptcy, we could see many closures on the horizon and it’s simply because it is a really difficult time to be a business,” she said.

Solberg said businesses have seen virtually all their costs increase, including food fuel and rent.

“It’s hard for many of them to see a future where they can recover and survive and it’s maybe easier to just close their doors.”

In the months leading up to the Jan. 18 deadline organizations like CFIB as well as Restaurants Canada have called on Ottawa for extensions to the deadline.

During a Jan. 17 media conference Prime Minister Justin Trudeau said that it was time to wrap up pandemic financial aid programs.

“We understand that things — even as the economy has bounced back from COVID — continue to be challenging, which is why we extended, twice, the repayment deadline for the CEBA loans,” Trudeau said.

"We are now far enough from the pandemic that we do have to wrap up pandemic programs," Trudeau said. "Pandemic supports, we all know, had to end at one point.”

-- With files from Rachel Aiello and Joey Chini.