Business owners struggling to pay back COVID-19 loans with rising operating costs
Running a business can mean long days and tight margins, and while pandemic recovery continues, the repayment of loans racked up during the global emergency is adding to those regular stresses.
Downtown Ottawa restaurant Union Local 613 owner Ivan Gedz is no stranger to that feeling.
He is banking on Ottawa Pride at the end of August to try and help get his books in the black.
He says normally, he wouldn’t be relying on a single event, but with money tight, it’s bringing on tough buying decisions.
“Right now, I’m, you know, ordering a case of wine or a couple of kegs of beer. I have to make these very delicate decisions just to maintain cash flow,” Gedz said.
Like many businesses, Gedz says Union Local 613 is not even remotely close to recovered from the COVID-19 pandemic, estimating overall revenue is down about 25 to 30 per cent.
The bar is one of the nearly 900,000 businesses that took out Canadian Emergency Business Account (CEBA) loans. Initially, the interest-free loans capped out at $40,000, but as the pandemic dragged on and public health restrictions remained in place, a $20,000 extension was offered.
If businesses are able to pay back up to $40,000 of the loan by Dec. 31, $20,000 will be forgiven. If not, the business is on the hook to pay it back over the next two years with a five per cent interest rate.
In the current business climate, Gedz says that isn’t in the cards right now.
“I’ve also injected substantial funds into the business since then. And just as a caveat, not that I necessarily deserve it or whatnot, but I haven’t paid myself prior the five months at this point,” he said.
He added that the rising cost of doing business isn’t helping the recovery, pointing to increased costs coming from
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