After repeated calls by the business community, interest groups and opposition parties, Prime Minister Justin Trudeau has announced that his government is extending the loan repayment deadline for Canada Emergency Business Account to Dec. 31, 2026, one full year after the current deadline.
“We know that some need a bit more runway,” Trudeau said, after emerging from a Liberal caucus retreat Thursday.
“We’re giving small businesses in Canada more time to pay back emergency loans offered during the Covid-19 pandemic.”
Between April 2020 and June 2021, close to 900,000 applications were made to the CEBA program, with a little over $49 billion handed out.
However, with only a reported 21 per cent of businesses, as of May 31, having paid back their loans in full, a large chunk remains unpaid.
The program, launched in the wake of the pandemic, originally had a payment-in-full deadline of 2022, but with a sharp rise in Omicron cases, the federal government, seeing a slowing in business bounceback, extended it to the end of 2023.
Those able to get funding of $60,000, for example, currently have until this coming Dec. 31 to pay two-thirds of the amount and have the last third, $20,000, forgiven.
The alternative, until Thursday’s announcement, for business owners was a two-year payment plan, at 5 per cent interest, due Dec. 31, 2025.
That deadline has now been extended by a year.
But will it be enough?
“This news comes with mixed feelings for the Pincher Creek and District Chamber of Commerce,” said president Rylan Brown in a statement Friday.
“It’s great that business owners who need more breathing room can express the option to extend the payment. The troubling part of this statement is that it’s only a short-term fix. It begs the question, what happens when the piper calls?”
Brown, though, is recommending businesses don’t go it alone.
“I would suggest that our members in this predicament speak with their accountants and lenders for a better long-term solution. Many lenders are stepping in to take over the loan so business owners can capitalize on the debt forgiveness and acquire a longer loan term to help soften the debt load,” he concluded.
The Canadian Federation of Independent Business, meanwhile, characterized the announcement as “disappointing.”
“The (federal) 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,” the statement opened.
“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.”
Figures compiled by the federation indicate that 69 per cent of small businesses that accessed the loan have not yet been able to repay any of it and only 18 per cent have repaid their loan in full as of September.
View the above image on the Government of Canada website here.