It is next Thursday that more than 160,000 Quebec SMEs who used financial assistance from the federal government during the pandemic – via the Canadian Emergency Business Account – will have to have completed the repayment of their loan if they wish to take advantage of the subsidy that came with the federal aid program.
We remember that the federal government intervened massively during the pandemic to support the Canadian economy through generous financial support programs, whether the employment subsidy for businesses or the Canadian unemployment benefit. emergency (PCU) for workers.
Ottawa also set up a specific program for SMEs by creating the Canadian Emergency Business Account, the CEBA, which initially granted loans of $40,000 which were quickly increased to $60,000 to allow businesses to cope with the restrictions imposed by successive confinements.
Businesses that took advantage of this emergency financial assistance could transform part of the loan into a grant if they made full repayment of the loan before September 2023. The grant portion on a $40,000 loan amounted to $10,000 and reached $20,000 on a $60,000 loan.
In Canada, more than 900,000 SMEs have used this emergency aid which resulted in disbursements of 49.2 billion from Ottawa. In Quebec, 182,923 businesses benefited from emergency aid from Ottawa for a total of 10 billion.
Last September, following repeated pressure from small businesses, Ottawa agreed to extend the deadline for repaying loans qualifying for the subsidy to January 18, 2024.
Businesses that have not repaid their loan by this date will have to repay to Ottawa the entire amount they obtained at an interest rate of 5%, within three years.
“It is certain that it is more advantageous to repay the loan and take advantage of the $20,000 grant. Several of our business clients repaid the emergency loan from their cash flow or using their credit facility,” explains Patrick Lemelin, Senior Vice-President, Business Strategies, Solutions, Processes at National Bank.
To date, nearly 70% of BN’s 30,000 business customers who took advantage of emergency federal aid have made arrangements to repay the federal government, and every day more businesses are making full payment.
Already, last September, before the federal government extended the grace period until January 18, 2024, nearly 20% of Canadian SMEs had repaid the emergency federal aid and took full advantage of the subsidy of 25 or 33%.
Companies in difficulty
However, the situation is not the same for many SMEs which were greatly weakened by the pandemic and which have laboriously continued to operate since then, particularly in the catering, services, tourism and accommodation sectors.
At Desjardins, they confirm to me that 30 to 40% of businesses that benefited from emergency aid from Ottawa and that must repay their loans are currently under pressure.
More than 80,000 Desjardins Group business clients who mainly benefited from the $60,000 emergency loan during the pandemic in 2020 and who must now repay it in full if they want to benefit from the $20,000 grant.
“We try to accommodate our business clients through our various services, but there are many who are under pressure,” Chantal Corbeil, spokesperson for Desjardins Group, confirms to me.
We are mainly talking here about small businesses, such as convenience stores, hair salons, restaurants that used emergency aid from Ottawa, but are now struggling to even hope to repay it.
According to a survey conducted last March by the Canadian Federation of Independent Business, more than 17% of Quebec SME owners said they would be unable to repay their emergency loan in January 2024 and hope to benefit from the $20,000 subsidy.
“More than 45,000 Quebec SMEs are at risk and could close their doors if they have to repay the entire $60,000 loan,” assesses Christina Santini, director of national affairs for the Canadian Federation of Independent Business. .
This is why we suggest that SMEs seek a solution with their financial institution by January 18 and keep a record of their steps.
If an SME cannot come to an agreement with its financial institution to have its emergency loan repurchased, it will still be able to take advantage of a new deadline granted by Ottawa until March 28 to allow it to find an alternative financing route and still be able to benefit from the $20,000 grant.
All this canvassing comes at a time when confidence among SME owners has not been this low since the 2008-2009 crisis. The confidence index of Quebec SME managers fell below 50 points to 42 points, below the national average of 45.6 points. Nothing to rejoice about.