CFIB says 200,000 small businesses took new loans to meet CEBA repayment deadline
Roughly 200,000 small businesses took on new debt to refinance their Canada Emergency Business Account loans to access the forgivable portion of the loan, says the Canadian Federation of Independent Business.
CFIB president Dan Kelly says many businesses that had to borrow to repay their CEBA loans are facing high interest rates and will be challenged to meet their payment obligations.
READ: Small businesses hold onto hope for CEBA forgiveness, extension
More than 50,000 small businesses are also pursuing a special extension to Thursday as they are in the process of refinancing.
The federal government provided interest-free loans to small businesses to help recover from losses during the COVID-19 pandemic.
Businesses that met the Jan. 18 repayment deadline could access 25% forgiveness of their loans.
Corinne Pohlmann of CFIB says Ottawa should do more to help businesses deal with the high cost of operations and provide concrete financial relief measures in the upcoming federal budget.
According to a Canadian Press story from November 27, 2023, some 900,000 organizations across the country applied for and received a Canada Emergency Business Account (CEBA) loan during the COVID-19 pandemic. The program allowed businesses and organizations the chance to receive up to $60,000 in interest-free loans to assist them weather the shutdowns and slowdowns caused by the pandemic.
A total of $49.2 billion was disbursed through the program. The program allowed up to one third of the loan to be forgiven if a business paid back the outstanding amount by Jan. 18, 2024.
That deadline is now upon those who accepted the loans. Businesses and organizations that fail to make the repayments will lose out on the forgivable portion, and the debts will then convert to a three-year loan with an interest rate of 5% annually. The repayment deadline to qualify for partial loan forgiveness also included a refinancing extension until March 28, 2024, if businesses refinanced their loans with a financial institution.