January 25, 2024
More than a quarter of businesses missed the deadline to repay their Canada Emergency Business Account loans by Jan. 18, the federal government estimated on Monday.
CEBA was the most widely used pandemic support program for businesses, sending out loans of $40,000 or $60,000 to nearly 900,000 companies in 2020 and 2021. More than $49-billion was extended.
Businesses that paid back their loans by last Thursday would have either $10,000 or $20,000 forgiven, and would not be charged interest. Starting last Friday, outstanding loans accrue interest at a 5-per-cent annual rate. The loans are due in full on Dec. 31, 2026.
At a federal cabinet retreat in Montreal on Monday, Finance Minister Chrystia Freeland and Small Business Minister Rechie Valdez announced that an estimated 75 per cent of CEBA recipients had closed their accounts with the government by Thursday. “Thank you to all the small businesses who did the right thing to keep Canadians safe and then continued to remain resilient and persevere through some very challenging times,” Ms. Valdez said.
However, that number includes businesses that refinanced their loans with their bank or an alternative lender, so they will still be carrying debt, but no longer with the government. When asked, the ministers said they were not sure what portion of that 75 per cent included business owners who refinanced their loans.
Dan Kelly, president of the Canadian Federation of Independent Business, which represents 97,000 small and medium-sized businesses across Canada, said his group has surveyed its members on this issue and he estimates that at least a third of those who repaid their CEBA loans did so through refinancing.
“While government got its money back, the debt burden to many small businesses didn’t suddenly go away – it just moved from the left pocket to the right one,” he said.
He said it’s concerning that a quarter of all businesses that took out a CEBA loan couldn’t pay it off so far, as the percentage represented hundreds of thousands of businesses.
