Toronto, March 09, 2023 (GLOBE NEWSWIRE) -- Restaurants Canada proposes a win-win solution for the federal government to save small businesses, and specifically restaurants as they continue to struggle with pandemic-related debt. With the Canada Emergency Business Account (CEBA) loan reimbursement deadline approaching quickly, Restaurants Canada is proposing a 36-month payback extension, with a scale-down model on the forgivable portion. This could save thousands of restaurants and other small businesses from declaring bankruptcy in the near future.
For the majority of Canada’s foodservice sector, including dine-in and takeout restaurants, caterers and bars etc. the pandemic ushered in a period of unprecedented uncertainty, along with major financial challenges. In response, the federal government launched the CEBA program, which gave small businesses and not-for-profits interest-free loans of up to $60,000 to keep doors open and soften the financial blow which so many businesses grappled with.
To ensure that the foodservice sector continues to play a major role in a strong economic recovery, Restaurants Canada’s Federal Pre-Budget Submission 2023 recommends that the federal government:
- Provides additional leniency to CEBA recipients by extending it for 36 months;
- Implements a scaled-down model on the forgivable portion of the loan with a five per cent decrease every six months to encourage timely repayment.
The extension along with the scale-down model will:
- Offer more time for the government to see the CEBA loans reimbursed; and
- encourage businesses, and specifically restaurants to reimburse their CEBA loans as soon as possible, in order to benefit from a larger forgivable portion.
“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.
Key findings on the restaurant sector’s use of CEBA loans:
- 83 per cent of table-service restaurant companies and 56 per cent of quick-service restaurant companies received a loan through CEBA; and
- the majority of restaurant operators required these loans to keep staff employed (77 per cent), to pay for utilities (65 per cent), goods from suppliers (62 per cent) and rent (61 per cent).
Extend and restructure the CEBA loans to make repayment possible and more palatable
As the Dec. 31, 2023 repayment deadline approaches, a Restaurants Canada survey has revealed 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. This finding is unsurprising given that 43 per cent of the foodservice sector continues to operate at a loss or just break even and one in four independent table-service restaurants are not expected to recover from pandemic-incurred debt unless current conditions change.
“The inability of some restaurateurs to pay back these loans is a reflection of the state of our industry as a whole. Our sector emerged from the pandemic as one of the hardest hit financially, with many owners being forced to take on significant debt just to keep their doors open. The industry is also struggling with a number of post-pandemic operational challenges like inflation, labour shortages and supply chain hurdles - all of which are significantly impacting the profitability of these businesses,” said Bourbeau.
Restaurants Canada looks forward to its ongoing collaboration with the federal government to ensure foodservice remains an active part of the nation’s economy.
About Restaurants Canada
Restaurants Canada is a national, not-for-profit member-based trade association advancing the potential of Canada’s diverse and dynamic foodservice industry through member programs, research, advocacy, resources and events. Canada’s foodservice sector is a $95 billion industry that serves 22 million customers across the country every day. As the fourth-largest private-sector employer, Canadian foodservice directly employs 1.2 million people, and indirectly supports another 290,000+ jobs in related industries, with $32 billion in food and beverage products purchased every year. www.restaurantscanada.org