As pandemic loan deadline looms, Toronto city council to vote on motion calling for extension

Local businesses in Toronto are facing a looming deadline to repay — or refinance — tens of thousands of dollars each in government-backed emergency loans offered during the COVID-19 pandemic.

The upcoming deadline means small- and medium-sized businesses and non-profit organizations eligible to receive a portion of their loans forgiven could lose out on that forgiveness if they can't pay back what they owe or prove they've applied for refinancing with a financial institution by Jan. 18, 2024.

"It's so stressful for us," said Irem Sacakli, co-owner of Turkish restaurant and design studio Flame Food and Design. 

"We can't foresee what is going to happen."

The federal government created the Canada Emergency Business Account, or CEBA, in April 2020. The program provided zero-interest loans of up to $60,000 to small- and medium-sized businesses and non-profit organizations that saw substantial revenue declines due to forced closures, capacity limits and other pandemic restrictions. 

Business owners who borrowed $40,000 or less could have up to $10,000 forgiven, and those who took the maximum $60,000 could have $20,000 forgiven.

Businesses that don't meet the upcoming deadline will see their balances automatically converted to a three-year loan with a five per cent interest rate. Those businesses don't have to make payments on the loan itself until the end of 2026. Instead, they can choose to pay the interest only during that time. 

With the clock ticking, some businesses are struggling to get the cash together while others have been told they never qualified for the borrowed money in the first place. 

Sacakli, who opened the restaurant serving "neo-Anatolian" cuisine in Bloor West Village with her husband in 2018, told CBC Toronto she's been dreading the CEBA repayment date because she can't pay back $40,000 right now.

She says they've been working hard to cut costs while maintaining staff and the quality of their food, but business hasn't fully recovered.

"We are still living tough days because of the general economic situation, not because of COVID this time," Sacakli said. "We are so lucky for having our guests but... we see that mortgage increases are a lot so they want to stay at home and then they rarely go out and that really affects us."

In total, CEBA loaned out around $49 billion to more than 898,000 businesses across Canada. In Ontario, more than 360,000 Ontario businesses were approved for CEBA loans totalling over $19.7 billion.

The federal government has already pushed the deadline back twice in recognition that some small businesses continued to struggle to make ends meet. The original deadline to repay the CEBA loan and benefit from the partial loan forgiveness was Dec. 31, 2022.

Businesses working to refinance their CEBA loan have an additional two months  — until March 28, 2024  — to repay and get the partial loan forgiveness.