Quebec Restaurants Struggle with Federal Pandemic Loans Repayment Deadlines

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A significant number of Quebec-based restaurants are grappling with crushing loans procured from the federal government during the global pandemic. As the repayment deadline looms, bankruptcy hovers ominously for many dining establishments.

In Montreal’s Saint-Laurent borough, the chic Trattoria La Villetta, famed for its coffee and delectable Italian dishes, has held fort for over three decades. The family-owned treasure is managed by John Insogna and his mother, who worry that their culinary legacy may soon become untenable. Like numerous other businesses, they sought financial relief during the pandemic through a Canada Emergency Business Account (CEBA) loan, which they now find difficult to repay.

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“Reluctantly, we found ourselves knocking on the doors of a CEBA loan mainly because the pandemic left us bereft of any other financial recourse,” revealed Insogna.

This predicament isn’t unique to Trattoria La Villetta. As per the Quebec Restaurant Association (ARQ), a staggering 80% of the restaurants in the province have received a CEBA loan. However, two-thirds of these recipients have not yet managed to make any repayments.

These borrowed funds—either $60,000 or $40,000—were intended to anchor small-and medium-scale businesses amidst the pandemic-induced economic tempest. For those managing to meet the Dec. 31 repayment deadline, $20,000 is promised to be written off. As for $40,000 loans, a quarter would be recouped.

While the federal government has graciously extended repayment to Jan. 18, 2024, the ARQ contends that such an extension barely provides breathing space, considering the debilitating labour shortages and escalating costs in the industry.

“Although our cash register may suggest a healthy inflow, unprecedented inflation levels ensure that by the time the bills roll in, our coffers are depleted,” lamented Insogna.

A grim statistic divulged by the ARQ states that since the advent of the pandemic, approximately 4,000 Quebec restaurants have capitulated, leading to a substantial drop in the number of operational restaurants.

Dominique Tremblay, the spokesperson for ARQ, stated, “Prior to the pandemic, we boasted around 21,000 restaurants, and that figure has dwindled to a mere 17,000. The loss is deeply felt.”

The government has thrown in another proposal—the option of refinancing the CEBA loan with a financial institution before a deadline set at March 28. However, this alternative has been met with scepticism.

Insogna described his predicament with a heavy heart: “The situation is devastating and truly heartbreaking.” With a note of despair in his voice, he voiced his concerns that, without significant changes, he might be left with no choice but to close his establishment permanently.