Many small businesses in Northern Ontario that received financial assistance from the federal government to survive shutdowns during the COVID-19 pandemic are finding themselves struggling to repay the tens of thousands of dollars they borrowed today limit to avoid paying interest.
Lola Jones, owner of a clothing and home decor store in North Bay, told CBC News in an interview Wednesday that she wasn’t sure she would be able to pay off her loan on Jan. 18.
She says she had no choice in obtaining a loan from the Canada Emergency Business Account to survive due to the mortgage and other bills to pay when her business was closed during the confinements.
Ms. Jones finds it a little unfair that small business owners were forced to take on debt while employees of these same businesses received the Canada Emergency Response Benefit and did not have to make repayments.
In Thunder Bay, the owner of clothing company Ungalli, Hailey Hollinsworth, says she needed to use all the profits from holiday sales to be able to repay her loan on time.
Now that puts us in a difficult situation to start the year.
The problem is, if you don’t pay in full, you don’t get any exemptions, says Thunder Bay Chamber of Commerce president Charla Robinson.
So you either have $40,000 or you don’t, and now you owe $60,000.
Many of those who originally took out the loan thought the economy would come back to their sector a little stronger than it did, Robinson adds.
The president of the Thunder Bay Chamber of Commerce points out that there is also the option of refinancing the loan with your financial institution, but she admits that it is difficult to obtain a loan of $40,000 when a business is experiencing financial difficulties.
Restaurants particularly vulnerable
In Hearst, Lina Lamontagne, owner of Pizza Place: Bar and Grill, was able to repay $40,000 borrowed before the deadline, allowing her to keep the remaining $20,000 of the total loan of $60,000.
She believes that owning this restaurant for 27 years and having little debt has helped her a lot.
If I had been in business for 10 years, it would have been a completely different matter.
Ms. Lamontagne adds that her clientele is loyal, but the income lost due to the closure of the dining room, which forced her restaurant to only offer take-out and delivery, forced her to take out this loan.
[J’avais besoin des] $60,000, I used it well, she says.
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Lina Lamontagne stays informed about the restaurant industry in the region. (Archive photo)
Photo : Radio-Canada / Francis Bouchard
Once the restrictions were lifted, she put as much money aside as possible to be able to repay the loan when it came due.
I waited until the end, to be honest with you. I was hoping that the government would give us another little gift, adds the restaurateur, emphasizing that supply costs have increased significantly.
In the last six months, there are things that have increased by 25, then by 35%, and then it continues.
Restaurant Canada, which provides us with information almost every day […]tells me that 20% of restaurateurs [qui ont obtenu un prêt COVID sont sur le bord du gouffre]adds Ms. Lamontagne.
With information from Erik White and Félix Hallée-Théoret
2024-01-19 00:11:03
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