As an immigrant to Canada, I wound up in Montreal in 1979. The happening event in la belle province was the upcoming first referendum on Quebec sovereignty, scheduled for the spring of the following year. It was all anyone talked about. Since I had what could generously be called a nascent understanding of French, most of what I heard came from freaked-out English speakers.
Where I tended to hear the other side, in a rapid patois I couldn’t follow and a gracious, if halting, Frenglish by those kind enough to put up with me—it helped I was American and helped even more if I slipped into a southern accent—was in taverns and restaurants around town.
One of the restaurants was a place called Quebec Smoked Meat in Point-Saint-Charles, a working-class neighbourhood. I was pretty convinced smoked meat was Quebec’s culinary gift to the world. Not pastrami, not corned beef, but a unique treatment of the fickle brisket.
Alas, Quebec Smoked Meat is no more. It closed the end of June after 73 years of serving up massive sandwiches. It was the second blow to my gastronomic memories of Montreal, the first coming only this spring when The Main closed its doors after 50 years.
And Bens, where I hung out as a student at McGill, closed in 2006 after 98 years serving heart attack on a bun.
While not the only reason I’m unlikely to head back to Montreal, not knowing where to get a good smoked meat sandwich is certainly a consideration.
But hey, businesses come and businesses go. C’est la vie.
Unless it’s your business. And then you’ll fight like hell to keep it going. You’ll abandon your go-it-alone, independent, entrepreneurial philosophy and look for the nearest bail-out or faint-hope scheme before you’ll reluctantly give up and head for the exit.
It’s something I witnessed too many times working at a bank. A business owner couldn’t face the reality of his/her business failing, and, having lost the ability to see financial reality, they moved forward on hope alone. They ignored the offer to help wind down the business and salvage whatever it was still worth rather than drive it into bankruptcy and come out far worse off.
But those business owners were dealing with a bank.
Small business owners dealing with the government want a bail-out. Forgiveness. Forbearance.
The Canadian Chamber of Commerce, the Canadian Federation of Independent Business, Restaurants Canada, the Tourism Industry Association of Canada, and a mind- boggling coalition of 256 groups are asking the federal government to extend the repayment deadline for Canada Emergency Business Account (CEBA) loans by two years—to the end of December 2025.
Recognizing the devastating effects of pandemic closures, the government made interest-free loans of $40,000 or $60,000 to businesses under CEBA. They were a lifeline for many shuttered businesses. The terms were great: no interest payments, and for businesses repaying their loans by Dec. 31 of this year, a forgiveness of $10,000 or $20,000 depending on the amount borrowed.
Can’t pay by the end of the year? The loan starts racking up interest at five per cent, which might have sounded dear when the program came into effect and looks like a gift now given commercial borrowing rates run much higher. Final repayment is due when businesses would like to see it due, Dec. 31, 2025.
Good deal? It was the only thing that kept many businesses going as they adjusted to the pandemic possibilities of operating or not.
Successful? Nearly 900,000 businesses received about $49 billion dollars through the program.
Problem is, only about 20 per cent of them had managed to repay their loans by this spring. And now they’re asking for more time and, in many cases, complete forgiveness of the loan.
Why? The reasons range from lingering malaise in what they hoped would be a pick-up in business; decisions to use their cashflow to reinvest in the business; inflation; continuing supply-chain issues; lack of staff; systemic discrimination against small businesses owned by women, racialized minorities, and others. Rarely noted as reasons are bad management; a changed consumer demand; overly optimistic expansion efforts; and the underlying belief that they just shouldn’t have to repay—entitlement.
Heck, it’s just government money, after all. You know, that stuff that exists because everyone pays taxes.
This is probably a good place to note they’re not alone in their efforts to extract more time and forgiveness for the flood of money Ottawa released to keep people and businesses afloat during Covid. The abuses of the federal wage subsidy to large businesses have been well documented. There was outrage from many individuals who happily took funds from one or more programs only to “discover” those funds were deemed income on which they had to pay tax.
And they’re marching alongside many former students who would love to see the government and banks forgive their student loans, having discovered a $28,000 debt—the average Canadian student loan debt—and a degree in Romance Languages should have included a seminar where they learned to say, “Do you want fries with that?”
But fear not. Canadian financial institutions—some, not all—have an answer to your prayers. They’re offering new loans to repay your CEBA loan. They’ll lend you the money to pay off your loan so you can take advantage of the forgiveness available by year’s end.
Of course, your new loan, for a smaller amount because of what’s been forgiven, will bear an interest rate higher than the five per cent the government is offering—indicative rates being based off prime lending rate- plus—but it’ll be on a smaller amount. What could go wrong?
Cue the receiver.
The interest rate won’t be fixed. Recent experience might suggest rates still have a way to go before they peak. Financial institutions aren’t big fans of forgiveness. Can’t pay? Bye-bye, business. Oh, and you might have pledged other assets to collateralize your loan. Poof! Vanished.
Probably better off taking your chances with the government. They have a lot of other things going on that tend to distract them. And they don’t have a good record when it comes to chasing debtors.
Or you could just face facts. If your business hasn’t regained its footing by now, what are the chances it will? Businesses come, businesses go, maybe better businesses replace them.
I seem to remember it’s called the free market.
