Thursday was the deadline for repayment of federal government loans given to businesses to help them adapt to pandemic measures.
The owners of Rain Dog Bar in Inglewood came up with the money to settle their $60,000 CEBA loan on Tuesday.
“The meeting we had was … we’re deciding if we’re going to try and come up with this money and come up with this payment from the owners, or if we’re just going to give up on the business, close it down,” said Bill Bonar, co-owner of Rain Dog Bar.
“We didn’t feel like there was a middle way.”
The small upstairs bar and kitchen opened at the worst possible time.
Somehow, despite the challenges, they survived.
“We opened for February 2020, just barely before the pandemic … didn’t qualify for some of the pandemic relief, so now we just feel like we’re barely hitting our stride and coming into what this business is supposed to be,” Bonar said.
Making the deadline comes with some immediate benefits.
It allows businesses to have one-third of the loan forgiven and spares them the five per cent interest rate that’s set to kick in on outstanding balances.
But it also comes at a cost — less cash on hand, sometimes financing from other sources and all at a time when the squeeze of inflation is just one challenge to the hospitality sector.
“We’ve got the federal liquor tax premiums coming, EI premiums keep on going up, so it’s costing more to do business,” said Mona Pinder, executive director of the Alberta Hospitality Association.
“And then property taxes on the municipal level, so it’s kind of all levels that the small businesses and restaurants are getting hit.”
The Jan. 18 deadline is not absolute.
Businesses can still work to refinance the loan and take advantage of partial loan forgiveness until the end of March.
For businesses that have not repaid the loan and do not refinance, the outstanding balance will be automatically rolled into a three-year loan at five per cent interest.
Just over 125,000 Alberta businesses applied for $6.8 billion in CEBA loans.
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