Prime Minister Justin Trudeau says the government is extending the repayment deadline for its small business pandemic loan programme by one year – but businesses will still lose the forgivable portion of the loan if they don’t pay it back in the coming months.
The Canada Emergency Business Account (CEBA) was introduced at the height of the pandemic to help small businesses that were forced to close or reduce operations due to public health measures. The programme offered interest-free loans backed by the federal government.
A business could apply for up to $60,000 through the programme – up to $20,000 would be forgiven if the rest was repaid by a certain date. The original repayment deadline was the end of 2022. This was later extended to the end of 2023.
Any business that missed this deadline would start to accrue interest and would have to repay the loan in full by the end of 2025. This deadline has now been extended to the end of 2026.
“While many have repaid these loans, we know that some need a little more breathing room,” Trudeau said on Thursday.
Businesses will be given a small extension – until 18 January 2024 – to qualify for debt forgiveness. Businesses that have refinanced their loans will have until March 28 to qualify.
All loans will be charged at five per cent interest if not repaid by 19 January.
Nearly 900,000 businesses have been approved for the programme, which has distributed just over $49 billion in loans. But only 21 per cent of those businesses had fully repaid their loans by 31 May.
The federal government has been under immense pressure from a number of business lobby groups to extend the deadline beyond 2023. Others have called for full forgiveness of outstanding loans.
The Canadian Federation of Independent Business said it was disappointed with the government’s announcement.
“The government has failed to address the most critical issue for outstanding CEBA loans – the loss of the $20,000 forgivable portion for those unable to repay the loans by the end of the year,” CFIB president Dan Kelly said in a statement.
“Extending the forgiveness deadline by a few weeks will be of little value to the thousands of small business owners who simply don’t have the money to repay right now.”
The Tourism Industry Association of Canada had a similar reaction to Thursday’s announcement.
“We must emphasise that a mere three-month extension of loan forgiveness for businesses that need to refinance is not commensurate with the severity of the crisis,” President Beth Potter said in a statement. “It does not adequately address the immense financial stress and uncertainty our members are experiencing.”
Other advocates saw the announcement in a slightly more positive light.
Barbara Barrett, executive director of the Frontier Duty Free Association (FDFA) – which represents 32 land border duty-free stores in Canada – said the extensions could prove to be a “lifeline” for some of her organisation’s members.
But Barrett said she would continue to push for full forgiveness of the CEBA loans.
“We’re not going to stop asking for full forgiveness, which I think they’re morally obligated to do in light of the border closure,” she told CBC News.
Perrin Beatty, president of the Canadian Chamber of Commerce, said the announcement is a signal that the government is listening to business concerns.
“The Chamber will continue to closely monitor the implementation of today’s announcement, which we hope will provide some of the stability and certainty businesses need to get back on their feet, continue to strengthen their communities and put Canada on a path to prosperity,” Beatty said in a statement.
The CEBA announcement was part of a series of new measures announced by Trudeau on Thursday aimed at addressing concerns about the cost of living as the governing Liberals face slumping poll numbers.
