A Plea for Reprieve: Unveiling the Realities of CEBA Loan Repayment Amid Economic Uncertainty

ByGreg Robins

Even with big CEBA loans, salons are determined to bounce back, even as they juggle with slower-than-expected recovery and escalating costs

Summary

  • Businesses that borrowed from the Canadian Emergency Benefit Loan (CEBA) are facing repayment challenges due to rising costs and slower-than-expected recovery from the pandemic’s impact.
  • Many participants in a recent survey expressed uncertainty about meeting the repayment deadline and are hoping for an industry-wide loan repayment extension.
  • There is a unanimous call for more time to recover and manage their increased debt, showing a high level of resilience and determination among businesses.

In a world still reeling from the shockwaves of the pandemic, salon, spa, and barbershop operators across Canada find themselves navigating the choppy waters of repaying their Canadian Emergency Benefit Loan (CEBA). A recent survey of 75 personal service businesses sheds light on the multifaceted struggles they face in repaying these lifeline funds, and their unanimous call for an extension.

Dealing with Loan Amounts Amid Rising Costs

81% of respondents accessed up to $60,000 of CEBA, and the rest, up to $40,000. However, as one participant aptly captured the mounting pressure, “business is suppressed due to the rising cost of inflation both household and business alike plus this payment will put us even in a bigger hole.” The sentiment of needing “more time for the repayment” was echoed throughout.

Facing the Repayment Timeframe Amid Uncertainties

The survey revealed that a significant 22% might not be able to repay their CEBA loans. The timeline varies for others, with some hoping to settle by 2025, while others still wrestle with uncertainty. “Our business is still down 30% to pre-pandemic level and needs a longer time to recover,” one salon owner shared. Another highlighted how an extended repayment deadline, even if they could pay by 2023, would provide a “greater level of security.”

Rising Debt Level Amid Inflation

The debt level has spiralled for many businesses. One salon owner stated, “We had no debt pre-pandemic. Now I owe $60,000… We were shut down three times this past year… I need at least another year to pay this back.” Another argued for a partial forgiveness scheme: “allowing people who can’t pay in full to still be forgiven the 25% if they can pay some of their loan repayment on time. This would help massively.”

Unanimous Call for Loan Repayment Extension

Every respondent wants the BeautyCouncil to seek an industry-wide loan repayment extension. They grapple with factors beyond their control – inflation, rising costs, market recession. “Market is really bad these days due to recession. Just need more time to pay off the loan,” said one participant.

Moreover, the survey respondents speak of a taxing mental toll, with one sharing, “Covid… changed a perfectly smooth business model into a strained and stressful one… Due to these newer occurrences, I’m not likely to continue my lease or even run a salon anymore.”

Looking Towards the Future

The comments paint a vivid picture of struggling businesses, yet there’s an enduring spirit. The unanimous call for an extension is a testament to their determination to bounce back, despite a slower-than-expected recovery and rising costs. As they continue to navigate the shifting economic landscape, businesses across the industry implore the Canadian Government to pave a path towards manageable loan repayment.