Tag: Canada Emergency Business Account loan

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Ottawa announces CEBA payment extension

Written by Dave Lueneberg on September 20, 2023. Posted in Business, Dave Lueneberg, Livingstone-Macleod, Stories. No Comments on Ottawa announces CEBA payment extension

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?

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“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.

Statistics regarding CEBA loan repayment

CEBA repayment may sink one in five Alberta businesses

Written by Submission on August 9, 2023. Posted in Beyond Local, Business, Columns/Opinions. No Comments on CEBA repayment may sink one in five Alberta businesses

Over 34,000 small businesses — 20 per cent of all small businesses in Alberta — could be at risk of closing their doors unless the federal government changes the deadline to repay the Canada Emergency Business Account loan, warns the Canadian Federation of Independent Business.

If the deadline isn’t extended, small businesses will lose the forgivable portion as of Dec. 31, 2023, which will add up to $20,000 more to their debt and cause them to face five per cent interest on the full balance.

“The message from small businesses is loud and clear: they need more time to repay their CEBA loan. With only half of small businesses back to normal sales, most businesses — particularly in the arts, recreation, hospitality and the service sectors — will need extra runway,” says Dan Kelly, CFIB president.

“Financial institutions still have time to delay repayment processes if the government extends the CEBA deadline, but that window is closing. Ottawa needs to act now.”

An update on small business and CEBA, released by CFIB in June, also includes the following key results:

—Of the nine in 10 Alberta small businesses that used CEBA, nearly three quarters (71 per cent accessed loans between $40,001 and $60,000, while nearly one in five (18 per cent) received loans of up to $40,000.

—Only 8 per cent of CEBA users in the province have repaid their loans.

—A total of 47 per cent of Alberta CEBA users risk missing the current repayment deadline by the end of 2023.

—Small businesses in the arts, recreation and information(62 per cent), hospitality (61 per cent) and social services (46 per cent) sectors are most likely to miss the current CEBA deadline, on a national level.

—The smallest businesses, with zero to four employees, are the most likely to miss the repayment deadline (49 per cent).

—Even among the 46 per cent of small business owners who indicate they will meet the 2023 deadline, almost three-quarters (74 per cent) say they will struggle to do so, and the same number would like to see an extension of the repayment deadline.

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“Despite difficult economic conditions, business owners want to repay the loan on time in order to secure the forgivable portion, but many of them cannot commit to doing so under the current timeline,” says Andrew Sennyah, Alberta senior policy analyst at CFIB.

“As we move closer towards the repayment deadline, the CEBA status quo creates more uncertainty for thousands of businesses already facing unpredictability in the economy. We call on Premier Smith to advocate for small businesses in the province with her federal counterparts to extend the repayment deadline for the CEBA loan to at least the end of 2024.”

CFIB is pushing the federal government to provide some relief to small businesses by:

—Extending the repayment deadline for the CEBA loan to the end of December 2025 or at least 2024.

—Considering additional debt forgiveness.

—Implementing an appeal process for CEBA loan recipients that are now deemed ineligible.

“The CEBA loan, which once served as a pivotal economic lifeline during the nearly two years of Covid restrictions, is now a source of immense stress and anxiety for small businesses. Ottawa must give them more time, or we will see more Permanently Closed signs in the coming months,” says Corinne Pohlmann, senior vice-president of national affairs at CFIB.

“If nothing changes, the consequences will be serious not just for affected businesses, but also for their employees and the wider economy.

Business owners can sign CFIB’s petition to the government to extend the CEBA repayment deadline.

In May alone, CFIB received over 3,500 new signatures, bringing its total to over 23,000 signed petitions from small business owners calling for improvements to pandemic supports and an extension to the CEBA repayment deadline.