Premiers of every Canadian province and territory are calling on the federal government to extend the repayment deadline for small-business loans given out during the pandemic by a year.
The request was made in a letter, initiated by B.C. Premier David Eby, to Prime Minister Justin Trudeau. It echoes previous calls from small businesses and chambers of commerce, asking for a further one-year extension for the repayment of Canadian Emergency Business Account (CEBA) loans, and more time for loan forgiveness. The current deadline is Jan. 18, 2024.
The deadline has already been extended twice, but Eby said that small businesses are being squeezed by economic pressures.
“Just when many small businesses are starting to find their feet after the pandemic, they’re now being walloped by rising inflation and interest rates,” Eby said.
The loans of up to $60,000 were given out to small businesses and non-profit organizations across Canada between April 2020 and June 2021. If paid back by the deadline, up to 33 per cent of the loan is forgivable. After Jan. 18, the loans will automatically convert to three-year terms and accrue interest at a rate of five per cent a year.
Through the program, approximately $49 billion went out to about 900,000 businesses across Canada. In B.C., 122,890 businesses were approved for CEBA loans worth more than $6.6 billion.
Extension would be ‘huge stress relief’: owner
Megan Johns, founder and owner of natural beauty store The Green Kiss, said that earlier this year, she was on track to repay her CEBA loan by the January deadline. Over the past six months, however, the rising costs of goods, services, and labour has changed that – despite the fact her business has continued to grow every year.
“Margins are getting smaller and smaller and smaller due to the rising costs across the board. Every aspect of the business has become more challenging and it is more challenging now than it was in 2020 so far.”
Johns said an extension of one or two years would be a “huge stress relief,” and also advocated for the idea of a repayment plan.
The BC Chamber of Commerce has also been actively calling for a one-year extension. President and CEO Fiona Famulak said many of the small businesses she speaks with are struggling with reduced revenues and high levels of debt, and an extension could be make or break.
“The loss of the forgivable portion – that could be the difference between an organization succeeding and an organization going bankrupt,” Famulak said.
The chamber has been critical of the previously announced three-week extension, which extended the deadline from Dec. 31, 2023 to Jan. 18, 2024.
“Small- and medium-businesses … are the backbone of our provincial economy. They’re the backbone of our national economy. So we need to support them in every which way,” Famulak said.
Work to be done at provincial level
While the Canadian Federation of Independent Business is also supportive of a one-year extension, B.C. Provincial Affairs Director Annie Dormuth said there is also a role the province could play in easing the burden on small businesses.
“There are also tools right here at home that they can use to help small businesses survive.”
Dormuth said she wants the province to provide more help to small businesses by paying for provincially mandated sick days, using WorkSafe BC’s surplus revenue to create rebates, and increasing B.C.’s employer health tax exemption threshold.
Source : CBC