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What happens when RRRF loans become due

Community Futures Yellowhead East board concerned that not enough businesses are in a good position to repay the pandemic relief business loans
cfye-general-manager-michelle-jones1
Community Futures Yellowhead East executive director Michelle Jones (seen here at a 2020 Town of Barrhead council meeting) told County of Barrhead councillors during their April 18 council meeting that the not-for-profit organization is concerned that many of the federal government's RRRF loan recipients will not be able to repay their loans by the deadline.

BARRHEAD - Community Futures Yellowhead East (CFYE) is concerned about what will happen to area business owners who took advantage of the federal government Regional Relief Renewal Fund (RRRF) loans.

That is what CFYE executive director Michelle Jones told County of Barrhead councillors during their April 18 council meeting.

Community Futures is a not-for-profit community-driven organization that provides a wide range of small business services and business management tools for people wanting to start or expand an existing business and those looking to sell or buy a business. It was founded in 1986 and is funded by the federal government in Western Canada by Western Economic Diversification Canada. The Yellowhead East branch is based in Whitecourt and is one of 27 in Alberta.

To help small and medium-sized businesses negatively impacted by the pandemic survive, the federal government created the $2-billion RRRF. Most businesses accessed this fund through their bank and applied for $40,000 or $60,000 interest-free, partially forgivable loans. 

But Jones said many small businesses could not access the loans through a traditional bank because they were either the sole proprietor or did not have a business bank account, so the federal and provincial governments provided Community Futures branches with funding to give those businesses an avenue to apply for those loans.

"We are very proud to say we were able to provide (an RRRF loan) to a business in every single one of our municipalities, thanks to our partnerships (with municipal councils) and the banks in the communities that spread the word that we were an option for those businesses," she said.

Out of their office, Jones said 53 clients took advantage of the RRRF program, successfully applying for 80 loans.

However, she said CFYE is concerned that many of their clients who received RRRF loans are still struggling and do not have the means to repay the loans.

The federal government extended the deadline for partial forgiveness of the RRRF loans to Dec. 31, 2023.

"The RRRF funds that we've lent out are not our specific lending dollars," Jones said, adding if their clients do not pay the loans back, it will not impact CFYE. "But these are still small businesses in our region. What will it mean to our communities if we have these clients that cannot pay back these loans and end up going bankrupt, and as a result, are forced to close their doors?"

She added that CFYE polled their clients about their ability to repay their loans by the deadline.

Some of them indicated that they were hopeful that they would be able to pay back the loan, while others were more confident, saying they had either paid back their loans or were in a position to do so. However, there were some who did not think there would be any chance that they would be able to repay the loan even with the extended deadline.

"The cost of supplies is rising, making it more difficult to get what (we) need. (We) would like to look at a payment plan option to see where (we) sit," one business replied.

In addition to their in-house survey, Community Futures conducted a province-wide survey from August to December of 2022 that noted that 60 per cent of businesses that received RRRF loans were still struggling with the economic impact of the pandemic. In businesses where the owner was the sole employee, 74 per cent reported they were still struggling compared to 49 per cent that had five or more employees.

The provincial survey also revealed that 59 per cent of business owners believed they would not survive another short-term crisis or economic downturn in the next two to five years. 

But perhaps the most telling stat of the survey, Jones said, was that Yellowhead East was identified as one of the regions with the highest proportion of businesses that had not recovered to their pre-pandemic level.

And although she said the RRRF is primarily a federal government funding program, the CFYE is attempting to be proactive and raise awareness of the issue.

"Because it is going to affect us all at the end of the day," Jones said. "If these businesses cannot repay these loans, are we going to see businesses close? These are the questions that we need to ask because it is going to have an impact on our local economies."

Barry Kerton, TownandCountryToday.com


Barry Kerton

About the Author: Barry Kerton

Barry Kerton is the managing editor of the Barrhead Leader, joining the paper in 2014. He covers news, municipal politics and sports.
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