For thousands of small businesses, it’s time to pay up. Thursday marks the federal government’s deadline for firms to repay pandemic-era debt to get relief on their Canada Emergency Business Account (CEBA) loans.
Through the CEBA program, Ottawa paid out nearly $49 billion to almost 900,000 businesses across Canada as many struggled due to closures and other restrictions during the COVID-19 pandemic.
Eligible businesses can keep up to $20,000 of the max $60,000 loan if they have repaid the rest by the Jan. 18 deadline. As of Friday, outstanding loans will convert to three-year term loans, subject to interest of five per cent per annum.
The latest numbers from the finance department are from the summer, and estimate only one in five of the 900,000 businesses have repaid their CEBA loans, though they expect a big rush right up to the Jan. 18 deadline, a senior government source told Global News on background.
The Liberal government has extended the deadline to get the forgivable portion of the CEBA loan twice, but Prime Minister Justin Trudeau made it clear Wednesday that Ottawa would not move the date a third time.
“Pandemic supports, we all know, had to end at some point,” he told reporters in Saint John, N.B. He pointed to private lenders as a source of refinancing for small businesses who are unable to meet the government’s repayment deadline.
If businesses applied to their original banks to refinance before Thursday, they could have until March 28 to pay back the loan and keep the forgivable portion. Small business owners who spoke to Global News say they’ve struggled to set up refinancing with their banks ahead of the Jan. 18 deadline.
The Canadian Federal of Independent Business (CFIB) says the federal government has “ignored the pleas of tens of thousands of small business owners” by holding firms to its repayment deadline.
“I believe the government will regret the decision to not grant more time as small businesses fail and default on their entire loan,” CFIB president Dan Kelly said in a statement on Thursday. “For many businesses, CEBA will be the straw that breaks the camel’s back.”
A spokesperson for Finance Minister and Deputy Prime Minister Chrystia Freeland told Global News in a statement earlier this week that the CEBA program was designed to give owners options.
“If you are a small business owner and do not currently have the funds to repay your CEBA loan, you can decide to refinance and benefit from additional time to receive the partial loan forgiveness,” spokesperson Katherine Cuplinskas said in a statement. “Alternatively, if you do not want to refinance your CEBA loan, you have three years to repay it in full. This flexibility is significant support for small businesses who might still be struggling to make ends meet.”
– with files from Global News’ Abigail Bimman
Comments