Restaurants Canada Proposes CEBA Solution to Save Struggling Small Businesses from Bankruptcy

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Restaurants Canada is proposing a solution to help small businesses, particularly restaurants, struggling with pandemic-related debt. With the Canada Emergency Business Account (CEBA) loan reimbursement deadline approaching, Restaurants Canada suggests extending the payback period for 36 months and implementing a scaled-down model for the forgivable portion to save thousands of restaurants and small businesses from declaring bankruptcy.

“The program was a key tool to assist thousands of businesses who had begun waiving their white flag as a result of the pandemic. Without the CEBA program, Canada’s loss of 13,000+ foodservice establishments would have been exponentially larger. However, coming out of the pandemic, restaurant operators across the country are still struggling to keep their businesses afloat,” said Olivier Bourbeau, Vice President, Federal & Québec Affairs. “For that reason, we are calling on the federal government to adopt our recommendation to implement a phased loan repayment approach for CEBA.

The CEBA program was launched by the federal government to provide interest-free loans of up to $60,000 to small businesses and not-for-profits to keep their doors open during the pandemic. However, as the pandemic continues, the foodservice sector, including dine-in and takeout restaurants, caterers, and bars, are facing major financial challenges. To support the sector’s recovery, Restaurants Canada recommends that the federal government provides additional leniency to CEBA recipients by extending it for 36 months and implementing a scaled-down model on the forgivable portion of the loan with a five per cent decrease every six months to encourage timely repayment.

Restaurants Canada also calls for restructuring and extending CEBA loans to make repayment possible and more palatable for struggling businesses. A survey conducted by Restaurants Canada found that nearly 20 per cent of the restaurants that have yet to reimburse CEBA will not be able to repay it in part or at all. Many restaurant operators required these loans to keep staff employed, pay for utilities, goods from suppliers, and rent.

Restaurants Canada acknowledges that the inability of some restaurateurs to pay back these loans reflects the financial state of the industry as a whole, which is struggling with inflation, labour shortages, and supply chain hurdles, among other post-pandemic operational challenges. However, Restaurants Canada looks forward to collaborating with the federal government to ensure the foodservice sector remains an active part of the nation’s economy.

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