CEBA loan repayment deadline puts pressure on small Manitoba businesses just 'getting our feet back under us'

Some small business owners in southwestern Manitoba say they'restruggling to balance repaying loans given by the government to help them through COVID-19 lockdowns, while still recovering from lingering pandemic economic pains.

Shaun Fjeldsted, who co-owns the BloomBox flower shop in Brandon with his wife,Trish, is among thebusiness owners across Canada who say they're feeling the pinch of a Jan. 18 deadline to repay loans they got through theCanada emergency business account, or CEBA.

"Another year for us probably would have been ideal," Fjeldsted said.

"We're just kind of getting our feet back under us. It would have given us a chance to stabilize and get back to more normal business."

CEBA,launched in April 2020 to help Canadian small businesses during the COVID-19 pandemic, offered zero-interest loans of up to $60,000. Up to $20,000 would be forgiven if the rest was repaid by a certain date.

Last September, the governmentgranted an extension to that deadline, moving it from Dec. 31, 2023, to Jan. 18, 2024. If businesses make a refinancing application before Jan. 18 with the financial institution that provided their CEBA loan, the deadline moves to March 28.

After the deadline, the loans will start accruing five per cent interest.

The repayments and interest rate couldbe devastating for small entrepreneurs, Fjeldsted said.

CEBA is "going to hurt us more than it's going to help us, I think, in the end," he said.

WATCH |Businesses face pressure of CEBA loan repayment:

Manitoba businesses face pressure of CEBA loan repayment

10 months ago

Duration 1:43

Brandon's Shaun Fjeldsted, co-owner of the BloomBox flower shop, and Erin Wells, general manager of the Dock On Princess, talk about the challenges they've faced in repaying their Canada emergency business account loans as they continue to recover financially from the COVID-19 pandemic.

Consumers still 'tightening their belt'

The BloomBox received $60,000 in loans and waited almost a year before spending them. It's been hard to make enough to pay the loans back because of rising operating costs in an economic environment that's still hard for many businesses,Fjeldstedsaid.

"Everybody's kind of tightening their belt and not spending. So when you sell a luxury product like we do, that definitely poses some problems," he said.

The BloomBox ended up taking a bank loanto repaythe CEBA loan.Fjeldstedisn't happy about that, but said it felt like there was no other choice.

The repayment deadline has "certainly has caused a lot of stress amongst businesses,"saidJamie Pugh, president of the Brandon Chamber of Commerce.

That's "partly because people had taken out other loans, other than the CEBA, to get them through the pandemic," she said.

Some businessesstruggling with the repayment are now working with their financial institutions to find ways to repay their loans, includingremortgaging and adjusting their budgets.

The loans are putting a strain on cash flow the largest concern for businesses, said Pugh.

Businesses still face uncertainty

Fjeldsted also said theunpredictability of cash flow has been a major challenge for his business.

"I used to be able to predict within a couple thousand dollarswhat my sales would be any month," Fjeldsted said. "Now, that could range from up 50 per cent to down 50 per cent."

Following last September's extension, there werecalls to extend the CEBA repayment deadline again.

Erin Wells, general manager at the Brandon restaurant the DockOn Princess, says the businessheld out on fully paying off its CEBA loan until it was clear no extension was coming.

Wells says the Dock was lucky it was able to repay the loan,but thinks other businesses might not be especially those running on a smaller scale.

"If you took that money to pay your everyday expenses and to keep going, you could easily not have that money to pay back now," Wells said. "I do think we'll see people that have to close, which is really unfortunate."

Even so, the Dock is still adapting to the new economic landscape, Wells said.

It's hard to predictthings like what a busy night will look like, or how much a food order for the restaurant will cost, she said.

For example, a roughly five-kilogramcase of tomatoes used to cost around $60. Now it's $138.

That makes keepingmenu prices level "a real balancing act," said Wells.

"We don't want to make things too expensive, but then we can't be losing money on things."

Wells says themoney local businessesmake goes back into the local community. Her restauranthas about 40 people on itspayroll.

While some government grants andsubsidies throughout the pandemic have helpedbusinesses survive, local support is stillessential, she said.

BloomBox co-ownerTrish Fjeldstedagrees, and says her business has anemphasis on selling local items.

"We're all in the same boat," she said.

"I feel like even the larger businesses, smaller businessesit affects you on a different scale, but it's the same story over and over again, and it's not good."