January 25, 2024
Despite consistent small business pressure, Prime Minister Justin Trudeau’s government is defending the decision to maintain the Jan. 18 Canada Emergency Bank Account (CEBA) repayment deadline.
Thursday is the deadline to repay CEBA loans or apply for refinancing and qualify for partial forgiveness. It comes after repeated efforts from small businesses and their lobby groups to see the federal government offer a further extension failed.
Speaking to reporters on Wednesday, Trudeau held firm on the federal government’s decision.
“We understand that things — even as the economy has bounced back from COVID — continue to be challenging, which is why we extended, twice, the repayment deadline for the CEBA loans,” Trudeau said.
“But we are now far enough from the pandemic that we do have to wrap up pandemic programs,” Trudeau said. “Pandemic supports, we all know, had to end at one point.”
WHAT WAS CEBA?
Introduced during the pandemic to help smaller Canadian employers weather the financial storm caused by COVID-19 lockdowns, 898,271 businesses received $49.2 billion from the federal government in CEBA loans.
Offering initially up to $40,000 to small businesses and non-profits that have experienced a loss of revenue due to COVID-19, the Liberals then expanded the amount that could be granted, seeing businesses able to apply for up to $60,000 in interest-free loans.
The government has extended the loan repayment deadline twice(opens in a new tab) already and payments were originally due Dec. 31, 2022.
CEBA REPAYMENT OPTIONS
Minister of Small Business Rechie Valdez told host Vassy Kapelos on CTV News Channel’s Power Play Wednesday that small businesses can choose from the “range of repayment options” to suit what works best for them.
CEBA loan holders who pay back their loan or apply for refinancing as of Jan. 18 will qualify for up to $20,000 of loan forgiveness and pay no interest.
But, if businesses are unable to pay the entirety, they can meet with their financial institution and seek refinancing. Those who apply for refinancing by Jan. 18 must pay their loan back minus the potential forgiveness amount by March 28 in order to qualify.
Any loan holders with outstanding payments as of Jan. 19 will have until the end of 2026 to pay their loans back in full, along with five per cent interest per year.
MAJORITY OF LOANS REPAID
As of Jan. 15, the government estimates nearly 70 per cent of CEBA loans have been repaid. However, the actual percentage won’t be determined until after the deadline passes.
Valdez echoed the prime minister and said the government is moving away from pandemic programs.
“We understand that small businesses continue to struggle, but we need to ensure that we balance our support for small businesses with fiscal responsibility. CEBA, again, was meant to keep small businesses afloat during the pandemic,” Valdez said.
WHO PUSHED FOR EXTENSION?
The federal NDP and Green parties, as well as local chambers of commerce, tourism and industry groups led the charge imploring the government to grant this loan repayment leniency.
In doing so, they made the case that while the government gave business in crisis a lifeline with these loans, years later, many still are treading water in their post-pandemic recoveries.
This has left many unable to make much more than a dent in the debt they’ve taken on, in the face of supply chain and hiring woes, as well as high inflation. Without the extension, these groups say that some local businesses are now facing the prospect of closing their doors for good.
