Small businesses hold onto hope for CEBA forgiveness, extension
Small businesses across Canada are wondering what is to become of their CEBA loans as the deadline for repayment has now come up and the federal government does not look as if it will extend the deadline.
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.
Convenience Store News Canada recently asked readers if they applied for and received a CEBA Loan. 95% said Yes. When asked if the were able to pay back the loan, 10% said not yet, but intended to pay back before the deadline, while 90% said they would need a further extension.
According to the CBC, Prime Minister Justin Trudeau told attendees at a luncheon put on by the Chamber of Commerce of Metropolitan Montreal that the deadline for the loans, already extended twice, was not going to be extended again, and that it was time to move forward. The Prime Minister reiterated the same message the following day, adding that it was time that pandemic programs need to start ending.
Those looking for another extension are voicing disappointment with the federal government that has given every indication that the repayment deadline will not be extended once more.
The Canadian Federation of Independent Business (CFIB) said in a release that it “is very disappointed the federal government has ignored the pleas of tens of thousands of small business owners to give them more time to repay their Canada Emergency Business Account (CEBA) loans in order to keep the forgivable portion.”
“Ottawa failed to address the most critical issue on outstanding CEBA loans—the loss of the forgivable portion. I believe the government will regret the decision to not grant more time as small businesses fail and default on their entire loan. For many businesses, CEBA will be the straw that breaks the camel’s back,” says CFIB president Dan Kelly in the release.
CFIB continues that its advocacy and push for an extension has garnered support from all 13 Canadian premiers and three federal parties (The New Democratic Party, Bloc Quebecois, and the Green Party) along with over 57,000 signatures on CFIB’s petition.
However, the same CBC report finds that some businesses say it would be unfair to have another loan repayment extension, or to forgive the loans entirely, as many businesses have already paid back their loans and Canadian might not look favourably on businesses getting ‘free money’ from the government. According to the federal government’s independent parliamentary budget officer, a further extension of the loan repayment would cost the federal government $907 million.
