Prime Minister Justin Trudeau says the government is extending the repayment deadline for its small business pandemic loan program by one year — but businesses will still lose the forgivable portion of the loan if they don’t repay in the coming months.
The Canada Emergency Business Account (CEBA) was introduced at the height of the pandemic to help out small businesses forced to close or limit their operations due to public health measures. The program offered interest-free loans backed by the federal government.
A business could apply for up to $60,000 through the program — up to $20,000 would be forgiven if the rest was repaid by a certain deadline. The original repayment deadline was the end of 2022. It was later extended to the end of 2023.
Any business that missed that deadline would start accruing interest and have to repay the loan in full by the end of 2025. That deadline will now be extended to the end of 2026.
“While many have paid these loans back, we know that some need a bit more runway,” Trudeau said Thursday.
Businesses will be given a small extension — until Jan. 18, 2024 — to qualify for debt forgiveness. Businesses that refinanced their loans will be given until March 28 to qualify.
All loans will start accruing five per cent interest if not repaid by Jan. 19.
Nearly 900,000 businesses were approved for the program, which distributed just over $49 billion in loans. But only 21 per cent of those businesses had fully repaid their loans as of May 31.
The federal government has been under immense pressure from a number of business advocacy groups to extend the deadline past 2023. Others have been calling for complete forgiveness of the outstanding loans.
The Canadian Federation of Independent Business said it is disappointed with the government’s announcement.
“The government has failed to address the most critical issue on outstanding CEBA loans — the loss of the $20,000 forgivable portion for those unable to repay the loans by year end,” CFIB president Dan Kelly said in a statement.
“The extension of the forgivable deadline by a few weeks will be of very little value to the thousands of small business owners who just don’t have money to repay now.”
The Tourism Industry Association of Canada expressed similar sentiments about Thursday’s announcement.
“We must emphasize that a mere three-month loan forgiveness extension for businesses needing to refinance does not align with the severity of the crisis,” president Beth Potter said in a statement. “This falls short of adequately addressing the immense financial strain and uncertainty that our members are experiencing.”
Other advocates saw the announcement in a slightly more positive light.
Barbara Barrett, the 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 “lifelines” for some of her organization’s members.
But Barrett said she plans to continue pushing for total forgiveness of the CEBA loans.
“We’re not going to stop asking for the full forgiveness, which I think they’re morally obligated to do given 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 strengthening 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 Trudeau announced Thursday aimed at addressing concerns about the cost of living as the governing Liberals face slumping poll numbers.
Source : CBC