As the deadline for repaying COVID-19 loans approaches, the restaurant industry is asking for more time.
“The main concern with us was that we had to shut down several times in the last three years,” says Pleasant Street Diner co-owner Tommy Fatouros.
That’s a lot of revenue to recover for the Dartmouth, NS, small business.
To help, the federal government created the Canada Emergency Business Account (CEBA).
The program offered interest-free loans of up to $60,000 to small businesses and not-for-profits.
According to Richard Alexander, the Atlantic vice president of Restaurants Canada, 83 per cent of table-service restaurants and 55 per cent of quick-service restaurants in Canada accessed the program.
“The CEBA loan is coming due December 31,” says Alexander. “So what our association has proposed to the government is a phased-down approach to repaying that loan so that the loan would not have to be repaid all at once. That would help with cash flow and that would recognize the tremendous amount of debt that the industry has taken on to survive COVID-19.”
With the pandemic recovery still ongoing, Restaurants Canada has asked the government for a three-year extension to pay back the loan.
“We have seen bankruptcies increase within our industry for January and February this year over last year by 116 per cent,” Alexander said.
He says their data shows another 20 per cent of restaurant owners saying they can’t meet the Dec. 31 deadlines and could be forced to close.
Volatility in the cost of goods is one of the main reasons why.
“Without warning, we are at the mercy of our vendors, so prices can go up 10, 15, 20 per cent. We have to accept the stock either way, right? I can’t change my menu every three weeks,” said Fatouros.
The House of Commons enters summer break in June.
Alexander says he believes the government wants to wait until it falls to make a decision on repayment of the CEBA loans, but because of the business cycle of the industry, a decision needs to be made before the house rises.
A decision on the loan request before that date will provide cost predictability to an unpredictable industry.