Nearly five years after Ontario went through lockdown to combat COVID-19, many small businesses find themselves grappling with the burden of repaying their Canada Emergency Business Account (CEBA) loans. These funds, intended to support businesses during the pandemic, have left some owners, like Cathy Reid of Endless Tails Pet Nutrition Centre, despairing about their futures.
Reid, who has run her business for two decades in Mississauga, Ontario, fears she might be forced to shut her doors. "Everybody wants me to stay. But, unfortunately, between this loan, rent being so high and purchasing the food … It's been a little bit difficult," she told CBC Toronto. The thought of declaring bankruptcy is devastating for her, as she values her strong ties to her clientele.
The CEBA program, introduced on April 9, 2020, aimed to provide relief for businesses impacted by the pandemic. Initially set at $40,000 per business, the limit was later raised to $60,000, with the program dispursing over $49 billion to nearly 900,000 businesses across Canada. Despite these efforts, as of the end of 2024, 161,000 businesses still owe nearly $7.8 billion on their loans, according to Export Development Canada (EDC).
Reid herself took out $40,000 through the Royal Bank of Canada after her accountant‘s recommendation, but she hasn’t been able to make repayments. She believes shifts toward online shopping and the rising costs of animal care contribute greatly to her plight. "I think online shopping has totally destroyed not just my business, but I think a lot of businesses," Reid stated.
Ryan Mallough, vice president of legislative affairs at the Canadian Federation of Independent Business (CFIB), comments on the broader struggle of businesses, explaining, "We had interest rates going up, cost of living, affordability challenges — people weren't spending the way they were pre-pandemic." The sentiment resonates with many as they navigate high-interest rates and fluctuated market conditions.
Another business owner, Paola Girotti of Sugarmoon Salon, sought out $60,000 through TD Bank but found it insufficient to sustain her three Toronto locations. The limitations of receiving grants—provided per corporation rather than location—compounded her challenges, forcing her to close one salon. Yet, unlike Reid, Girotti has managed to rebuild by taking over struggling salons, calling her business model for recovery successful.
While Girotti has made strides toward recovery, she prioritizes the security of her staff and has called for governmental mercy on the loans. "They need to just allow businesses to wipe the slate clean," she remarked, emphasizing the importance of supporting employees over focusing solely on debts.
This notion is echoed by Reid, who also feels the government’s role should include addressing fraudulent claims. "There was so much fraud there, and the government missed it. I feel like they're coming after the people who work the hardest, the ones out there making their mark in the community," she said, indicating her frustration with the system.
The EDC, trying to show empathy for struggling businesses, has been extending application deadlines and eligibility criteria for loan repayments. "We understand the financial challenges many businesses face as they recover from the pandemic and are sensitive to their situation," stated the EDC.
With upcoming federal elections, the CFIB is watching closely to see which party declares support for small business recovery. Mallough notes, "What are you doing to make the business climate in Canada stronger? What are your plans for lowering taxes?" These questions loom large for many business owners hoping for reprieve.
Particularly on Reid’s mind is the future of small businesses. "I worry for the future. Another 10 to 15 years, your children won't know what a small independent store is. They’ll be nonexistent because it's becoming more and more difficult for us to survive," she conveyed, her worry palpable.
Meanwhile, amid these challenges, New Mexico is setting trends with its Teacher Loan Repayment Program. This year, it has expanded access to loan forgiveness for educators, increasing the number of beneficiaries to over 800. Operating since 2020, this initiative has seen tremendous success, alleviating financial burdens for teachers statewide.
Public Education Secretary-Designate, Mariana Padilla, lauded the program, stating, "The Teacher Loan Repayment Program is a vitally important investment in our educators and their future." Beneficiaries can receive up to $6,000 annually for two years to help pay off federal student loan debts.
The initiative has benefited more than 2,500 teachers, offering some financial relief and recognizing their contributions to student education and community growth. The investment not only supports teachers but reinforces the infrastructure of schools for future generations.
These two contrasting examples—struggling Canadian small businesses grappling with repayment after pandemic relief and New Mexico’s investment in education—illustrate the varying efficiency and outcome of government loan programs. While one group faces crippling debt, the other finds paths to sustainability and growth.
The impact of government policies on loan access continues to shape the narratives of communities, from small businesses to educators, highlighting both successes and hurdles to providing assistance where it’s most needed.
Looking toward these divergent destinations, it begins to raise the question: how can governments refine their initiatives to favor sustainable growth for every sector?