Federal COVID loan repayments could put St. Clair West store out of business: owner

A small business owner says federal COVID-19 loan repayments could force her to shut down her business and the Canadian Federal of Independent Businesses (CFIB) says she is not alone.

Kym Klopp opened ecoexistence on St. Clair West 12 years ago to offer an alternative to conventional products with more eco-friendly options.

Klopp said she has struggled to get the store back up-and-running since the COVID-19 lockdowns.

“The day that we were allowed to open I had a massive flood here. So the whole upstairs fell into my store. So I was closed when it was going to be really great for people to come in for an additional two months.”

She decided to keep going and signed a new lease this year.

“I decided to sign that lease again because I’d say about in the last five years we’ve had 7,000 new residents move into the neighbourhood, strictly based on all the condominiums,” Klopp said.

But with the Canadian Emergency Business Account (CEBA) loan repayment deadline fast approaching, she’s not sure the business will survive.

Klopp posted a letter to the community on Instagram this week, asking for support local shops and restaurants this holiday season.

“We love being apart of the St. Clair West community and we will do everything possible to stay but we need help,” read the letter. “If you can spread the word, even better.”

The federal program offered up to $60,000 in interest-free loans to help businesses and non-profits survive government shutdowns.

According to statistics from a CFIB survey, conducted in September, only 34 per cent of businesses say they are able to pay off their CEBA loan by Jan. 18, 2024. That’s when the deadline is to save the loan’s forgivable portion, which can be up to $20,000.

Over half say they question if they can stay in business if they don’t get the forgivable portion. Over 360,000 Ontario businesses received CEBA loans during the pandemic, but a significant 61 per cent are still carrying an average of $134,000 of COVID-related debt.

Julie Kwiecinski, director of provincial affairs for Ontario at the CFIB, said many small business are still recovering and in the same place as Klopp.

“I think we need to remember why this CEBA loan was taken out. This was a lifeline during COVID. Businesses obviously didn’t want to be put in the situation, but the government closed them – on and off again closures, that was very challenging.”

She said restaurants in Toronto, which were closed for over 400 days to indoor dining, is another example.

“You can’t expect us to snap your fingers and magically all is well and your coffers are recouped and your revenues are back to normal,” said Kwiecinski. “This is a really serious issue and we were very disappointed.”

The CFIB was hoping for an extension of the loan repayment until Dec. 31, 2024, in the fall economic statement, but it was not mentioned.

“Every single premier in this country signed a letter, agreeing with us to extend the forgivable deadline to the end of next year. Every opposition party on Parliament Hill agrees with our ask to extend the deadline for the forgivable portion to the end of next year … The federal government is doing nothing. What are they waiting for?” asked Kwiecinski.

Rising interest rates may also be keeping businesses from taking out additional loans.

“We know that some have gone to banks. They’re being told that, ‘We’ll charge you 10 or 11 per cent interest on a loan to pay it all off so you can keep the forgivable portion of $20,000 but that’s 10 or 11 per cent interest,” said Kwiecinski.

It’s something Klopp has also tried.

“I’m really not sure how I’m going to repay the loan. I had a meeting with the bank and they’re very careful about who they’re giving loans out to for that,” said Klopp. “If you pay back a percentage, you get to keep a percentage and that’s where I’m at, and that’s why I put out that letter because I would hate to not exist anymore without people knowing that this is a reality for not just myself. And all of St. Clair West is struggling, specifically the restaurants which have very low margins.”

John Kiru, the executive director of the Toronto Association of Business Improvement Areas, said they anticipate they are going to see more community stores and restaurants go out of business as a result.

“We’re going to see more closures come the dreaded January and February. The main street retail sector, every year, we see shifts, but this particular year might be more significant than that,” said Kiru.

Klopp simply wants more time to help her shop get back to the point where it’s thriving again. “I don’t know what it’s going to look like in the end,” she said. “But I hope to still be here.”