Nearly 165,000 Quebec businesses still have six days to repay the $40,000 federal emergency loan (CUEC) they received during the pandemic.
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“Many thought that the deadline would be postponed, but that is not the case,” says Étienne Fiset, partner and insolvency administrator at Raymond Chabot. Nine out of ten SMEs had loans. The majority of entrepreneurs have questions.”
If a business received a $60,000 loan, it must have repaid $40,000 by January 18 to receive the remainder as a grant. However, if this is not the case, she must repay the loan in full with interest over a period of three years.
“There are many who will not be able to repay their money, but it is not only this circumstance that makes them come to us,” adds Mr. Fiset. In day-to-day operations there is often a profitability problem and a lack of liquidity.”
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“Every situation is different.”
After the deadline, every company will still be able to repay the loan, but it will not be an easy matter.
“We need to know whether they have the ability to add between $1,000 and $2,000 in additional expenses to their monthly operations,” the trustee explains.
“For a restaurant, for example, the CEBA loan is just a drop in a glass that is already very full given the explosion in raw material and labor costs.”
According to the Canadian Federation of Independent Business (CFIB), 45,000 Quebec businesses are at risk of closing their doors after January 18. In Canada, more than 200,000 SMEs are at risk of closure due to high levels of debt.
Carole Paquette, owner of Rembourrage Carole in Trois-Rivières, said last month that she will likely have to close her business. In fact, she does not believe she will be able to repay the loan granted through the Canadian Emergency Business Account (CEBA) on time. Photo provided by Carole Paquette
Sadness and resignation
The owner of a Blainville clothing store has already resigned. She won't be able to pay back the amount owed until next week.
On the other hand, she won't be the only one. According to the firm Raymond Chabot Grant Thornton, only 10% of Canadian companies had managed to make their refunds as of December.
“I feel average. We will not be able to refund the amount, says Nancy Cadieux. We do not intend to take advantage of the options offered for the time being.
“We’re at the last one. I’m sad and angry.”
Ms. Cadieux does not wish to comment on the future of her company. However, a decision will be made by the end of January.
Starting in October, the carpet began to slip beneath his feet.
“We thought there would be another delay or another change,” she adds. That didn’t happen.”
Important information about the CEBA loan
- Deadline for refund: January 18th
- Initial number of inquiries in Quebec: 183,000
- Number of companies that have defaulted on their loans so far: around 165,000
- Number of possible closures: 45,000
- Options until January 18th for companies
Option 1
The company pays back $40,000 of its $60,000 loan. The company will receive the remaining $20,000 grant. For a $40,000 loan, the $10,000 amount is converted into a grant.
Option 2
The company does not pay back the entire loan. The company will lose the grant portion of the loan and will have to repay the entire loan plus interest over three years (December 31, 2026).
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