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LETTER: COVID-19 loan repayment will sink some small businesses

'I fear that the obligation to repay this financial assistance will overextend beyond the abilities of the small businesses who made huge financial sacrifices to remain open during this worldwide crisis'

PelhamToday received the following letter from reader Tim Grech regarding the upcoming COVID-19 loan repayment deadline for small businesses.

For the majority of the general public, the devastation caused by the Covid-19 pandemic exists only in hindsight. However,  small businesses nationwide are continuing to struggle to recover from the economic consequences caused by the regulations and restrictions that were put in place for the sake of public health. There is no doubt that the Covid-19 pandemic has had a severe impact on the lives of Canadians. Such impacts include the fracturing of families, significant loss of life, and the disclosure of the fragility of our healthcare and senior care systems. On an economic level, such impacts included hits to the supply chain, the enforced closure of all non-essential businesses, along with the unforeseen costs incurred for businesses who were allowed to re-open. 

For 900,000 small business operators in Canada, the long-term hardship of this crisis will culminate in a few months.  As a response to the onset of the Covid-19 pandemic,  the Canadian Government acted swiftly to come up with a financial assistance program (CEBA) for small businesses. At the time, this was greatly appreciated. However, the long term ramifications were not anticipated. We had no foresight as to how long this crisis would last, how many times we would be ordered to close our business, and what costly restrictions would be placed on our business once allowed to re-open. Furthermore, we had no way of predicting that the pandemic would result in hyperinflation, supply chain issues, labour shortages, record high fuel cost, record high food costs, record high real estate prices,  sky rocketing interest rates and a recession. 

For many small businesses that availed of this financial assistance program, the time to pay it back is December of this year. As a reminder, the deal was that the Canadian Government would loan small business owners an amount of $60,000, with the condition of it being paid back by December 2023 (amended from December 2022). If this condition was met, they would be forgiven $20,000. If the loan was not paid back by December 2023, the borrower would be obligated to pay back the $60,000 in full, plus interest. In hindsight, this program merely added additional debt to the small businesses who were trying to keep our economy going. It sounded fair at the time but now not such a great deal.  All the small business owners who operated non-essential businesses were ordered to close for extended periods of time, yet still obliged to meet their pre-pandemic financial obligations with limited financial relief.  Many used up their savings and leveraged equity in their homes and businesses to maintain their financial obligations. In other words, it feels like we, as small business owners, have been treading water for 4 years now at great personal expense, while others floated in lifeboats. 

I fear that the obligation to repay this financial assistance will overextend beyond the abilities of the small businesses who made huge financial sacrifices to remain open during this worldwide crisis.  The collapsing of these small businesses would have significantly negative impacts on our economy, and further exacerbate our recovery from this recession. I am suggesting that for the health and wellbeing of our economy, the federal government should forgive the debt owed as a result of this financial assistance program. I strongly believe this to be a much better option than causing a rash of business closures causing significant harm to our small business community, and in turn,  our economy. If you are a politician, I sincerely ask that you consider this position. If you are not a politician, I urge that you engage with your local politician to consider this position.

Tim Grech