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Last spring, the Newfoundland and Labrador government announced a loan guarantee program for restaurants — but so far, businesses haven’t tapped into it.
As of December, no restaurants have received loans through the $10-million program introduced by the previous Liberal government, according to records obtained under an access-to-information request, though a few have successfully applied for guarantees.
Marina Sexton and Vince McCarthy, co-owners of Sugar Hill Inn & Chanterelles Restaurant in Norris Point, say businesses like theirs are being squeezed by a number of factors, from rising electricity bills, rising food costs and an ongoing labour shortage.
McCarthy looked at the provincial loan guarantee program but decided it wasn’t for his business, adding past experience with provincial programs has meant navigating a lot of bureaucratic red tape.
“All you’re doing is transferring one debt to another debt and that’s no help. We don’t need extra debt at this point,” Sexton told CBC News.
Restaurants are struggling, says association
Janick Cormier, vice-president Atlantic for Restaurants Canada, said the advocacy organization initially applauded the loan guarantee program and hoped it would allow restaurateurs to get loans so they could replace items like ovens and worn down chairs or fix leaky roofs.
However, Cormier said the eligibility criteria for the loan guarantee program turned out to be too narrow and mostly for restaurateurs who were struggling with existing loans.
“You essentially needed to already be in debt to be able to get that loan guarantee and be backed by the province,” she told CBC News.
Cormier wasn’t surprised there wasn’t much pickup in the program.
“The feedback from our membership was, ‘OK. Well, essentially you need to already be in debt to access this loan guarantee program’. I don’t need to trade federal debt for a provincially backed debt,’” she said.
Cormier believes the provincial government was trying to address a specific problem owners were facing over existing debt. She’d like to see the provincial government expand eligibility as well as the federal government remove GST and HST on food.
Sexton and McCarthy said restaurants need help, especially when it comes to securing labour. McCarthy said they’re in a small rural community with an aging population and younger people leaving for the mainland.
“We’re a seasonal business and in the summer time… it’s a real competition for workers. It’s very hard to get workers,” said McCarthy.
Sexton added she’s like to see the provincial government lobby the federal government for tourism to gain access to the temporary foreign worker program.
The rising cost of living is also hitting rural areas particularly hard, said McCarthy, because materials have to be transported further.
“The reality is, is that we can’t pass it on to customers because, you know, they’re only willing to pay so much for food,” he said.
CBC News asked Minister of Jobs, Growth and Rural Development Lin Paddock for an interview but was provided with a statement instead.
“The program was intended to assist restaurants in obtaining support for debt restructuring and relief by providing eligible applicants with the option of a loan guarantee from the provincial government if they could get a loan approved by a financial institution,” spokesperson Allison King wrote.
The intake for applications started Sept. 3 and ended Dec. 2. In that period, there were 21 applications but only 11 were deemed eligible, wrote King. Of the 11 letters, six have since expired and the remaining five are valid from late March to early May.
From getting the letter, applicants have four months to secure a loan, said King.
“We remain hopeful that some of the successful guarantee applicants will secure a loan from a financial institution.”
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