:format(url)/cloudfront-us-east-1.images.arcpublishing.com/lescoopsdelinformation/H5AP2SNOKJCNRL6HDY5KM3DYHM.jpg "Quebec SMEs Struggle to Repay Emergency Loans, Risking Thousands of Business Closures")
Concretely, owners who want to keep the subsidy portion had to repay up to $40,000 by Thursday or request refinancing from the financial institution that granted them the loan, otherwise the majority of them will see the amount to repay increase from $40,000 to $60,000.
According to the CFIB, 22% of the 180,000 Quebec SMEs having taken out the loan are having difficulty repaying.
The CFIB also estimates that due to heavy debt, some 45,000 businesses are at risk of going out of business.
“We won’t see a bunch of SMEs close on January 19, but we could see waves of closures in the weeks that follow,” says Jasmin Guénette, vice-president of national affairs at the CFIB. The government wants to turn the page, but it risks turning the page too quickly.”
According to Mr. Guénette, the vast majority of businesses are well-intentioned and have made efforts to repay the loan. However, many factors prevented them from getting their heads above water.
“The level of sales has not returned to normal in several sectors such as catering,” he explains. There is also the increase in the cost of materials, everything costs more. Borrowing costs have increased, operating costs have skyrocketed and taxes are on the rise. Companies are already heavily in debt and now they have to repay a loan that they really had no choice in taking out to pay the rent or electricity.”
A “catastrophic” exit
Although he believes that the program was very well thought out from the start, Pierre Harvey, business development advisor for companies, thinks that the release of the program was botched.
“The government had a very good reflex in creating this program in an emergency situation, but the exit from the program is completely catastrophic and is anything but helpful for the majority of SMEs. It’s a shame, because the release of the program will make people angry.”
Mr. Harvey emphasizes that the government should have followed up more closely with businesses.
“From the moment we postponed the reimbursement, I think we should have taken the financial statements of each of the companies,” he says. Of course among the companies that had the loan, some made money by placing it and others should not have had it because it only delayed the inevitable. But for the majority, it was useful and necessary.”
“I believe that the government could have, without costing billions of dollars, required businesses to repay at the rate of $1,000 per month for 40 months,” summarizes the expert. It would have been the most effective and least damaging way for SMEs.”
2024-01-17 23:10:13
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