Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday January 5, 2024
Small Businesses on the Brink
In the wake of the economic challenges brought on by the COVID-19 pandemic, small businesses across the nation are teetering on the edge of insolvency, caught in the crossfire of the federal government’s unwillingness to adapt measures amid rising interest rates and inflation. The latest data from a December 2023 survey conducted by a national business association paints a dire picture of the Canadian business landscape.
Approximately 34% of business owners have successfully repaid their Canadian Emergency Business Account (CEBA) loans, a lifeline provided during the darkest days of the pandemic. However, a concerning 23% of owners find themselves unable to make any payment, revealing the harsh reality faced by a significant portion of the small business community.
The Canadian Federation of Independent Business’s media relations officer, Dariya Baiguzhiyeva, emphasizes the looming threat, stating that 40% of business owners are at risk of missing the current payment deadline of January 2024. A staggering 250,000 small businesses nationwide, with 96,000 located in Ontario alone, are at risk of closure if the CEBA deadline isn’t extended.
Despite these distress signals, Hamilton Liberal MP and cabinet minister Filomena Tassi remains resolute in the government’s decision not to provide another extension on CEBA loans. Tassi argues that three extensions have already been granted, and the government has offered unprecedented support, asserting that small businesses still have options.
However, the Canadian Chamber of Commerce, representing over 280 industry associations, begs to differ. In a July open letter to Finance Minister Chrystia Freeland, they pleaded for an extension of the CEBA repayment deadline to the end of 2025, or at least by one year. The letter emphasizes that many businesses had no choice but to take on the loan due to circumstances beyond their control.
Failure to extend the deadline carries severe consequences for businesses unable to repay their loans, as they stand to lose access to the forgivable portion of up to $20,000, exacerbating their already burdensome debt loads.
Hamilton Centre NDP MP Matthew Green echoes the sentiment that the federal government is favouring large corporations over small businesses and non-profits, who have borne the brunt of the global pandemic and the subsequent cost-of-living crisis. Green calls on the Liberal government to prioritize and support small businesses in Hamilton as they navigate the challenges ahead.
The reluctance to extend CEBA’s deadline raises serious concerns about the government’s commitment to sustaining the backbone of our economy—small businesses. As interest rates and inflation rise, the federal government must reconsider its stance and provide the necessary support to prevent a wave of small business closures and the resulting economic fallout. The cost of inaction may prove far greater than the $907 million estimated by the parliamentary budget office, as countless businesses face an uncertain future, hanging by a thread over the precipice of insolvency. (AI)