Barber who sought N.S. COVID-19 loan calls program a 'blunder'

A Halifax barber whose business was ordered closed by the Nova Scotia government on March 19was eager to apply for a loan program the province launched a week ago to help small businessesweather the COVID-19 pandemic

But Eoin Wright, who owns Brewery Barber on Lower Water Street,is calling the termsof that loan "a joke" after he said he was quoted a 6.1 per cent interest rate and was told he had to start paying it back on June 30.

"This is just a blunder. I mean, it doesn't make any sense to me," said Wright."I don't like the interest rate, that's one thing, but asking people to start repayment before even summer starts, what the hell are they thinking?"

The program offers loans of up to $25,000. Wright said without a clear indication when he and others in his business might be allowed back to work, it doesn't make sense to even set a start date for paying back the loan.

Small and medium-sized businesses with employees that qualify for the federal government's $40,000 emergency loan program don't have to begin to pay back the money until December 31, 2022.

Wright, who doesn't qualify for the federal program because he's a sole proprietor,would have liked to see the province mirror those federal loan terms.

"I would be delighted to sign up for that," he said. "That would be very helpful to me and give me the breathing room that I need."

Nova Scotia Business Minister Geoff MacLellancalls the provincial program a good one and said Wednesday itis money that wouldn't normally be available to the hundreds of businesses that have applied for it.

As for the conditions surrounding the borrowing, MacLellan said those came about as a result of negotiations between the credit unions and the province. He said credit unions looked at the $20 million the province offered to guarantee the loans, and came up with the parameters.

"They've done their best, but the reality is that this60-day deferral is a cost that is borne by them," said MacLellan. "So, you know, they have identified that within this $20 million investment.

"What they bring to the table is that deferred interest which, you know, the reality is that they have a balance sheet and they're going to hold the line as best they can."

MacLellan said he was unsure whether it was the government or the credit unions that ultimately set the payback date.

But in an email exchange between Wright and Credit Union Atlantic (CUA), one of the institutions administering the provincial loan program, Wright was told the payback start date was determined by the province.

"While CUA is one of several credit unions delivering the program's COVID-19 stream across Nova Scotia, it is important to clarify that most terms of the loan were set out by the government, including the June 30 start date for repaying the loan," wrote Shaun MacIntyre, the credit union's director of commercial services.

Hundreds have applied

Even when barbers and hairdressers are given permission to return to work, they will likely need to spend money on upgrading their workspaces or buying personal protective equipment to meet new workplace safety requirements. It means addedexpenses for businesses that will have goneweeks, perhaps months, withno revenue.

Wright said he isn't surethe province had factored that into the emergency aid program.

"Some shops may have to manipulate floor plans," said Wright."They may have to bring in contractors, they have to bring in barriers.

"All of these things cost money at a time when we don't have any money. This is putting us all in a very awkward position where I think there's going to be a fair number of bankruptcies in this industry."

A Nova Scotia government spokesperson said in an email that to date,630 businesses have applied for the provincial loanthrough participating credit unions, with 38 applications processed.

Wright suggeststhe government rethink the program.

"I think they need to go back to the table and get their calculators and pens out and rework this program because I don't really see what benefit it is to anybody."