'Ottawa failed to address the most critical issue on outstanding CEBA loans': CFIB
The deadline for repayment of the loans issued as part of the Canada Emergency Business Account (CEBA) is today.
For eligible CEBA loan holders in good standing, repaying the balance of the loan on or before Jan. 18 will result in loan forgiveness of up to 33%, equivalent to up to $20,000, according to the federal government.
Business owners looking to secure the forgivable portion must repay up to $40,000 or apply for a refinancing loan with the bank that issued their original CEBA loan by today, noted the Canadian Federation of Independent Business (CFIB). If they miss this deadline, most businesses will see their CEBA debt rise by 50% from $40,000 to $60,000.
No extensions for CEBA repayments
The federal government is no longer extending that deadline, said Prime Minister Justin Trudeau.
“After the most intense period of COVID, there were other challenges. We have already extended this aid twice, but at a certain point, it is time to continue moving forward,” Trudeau said in French on Tuesday to an audience of some 650 business people gathered in Montreal at the invitation of the Chamber of Commerce of Metropolitan Montreal, according to a Radio-Canada report.
He repeated that message Wednesday, saying it's time to wind down pandemic programs, according to CBC.
Previously set for the end of 2023, the federal government moved the deadline for the repayment for partial loan forgiveness of up to 33% under the program to Jan. 18, 2024.
‘The most critical issue on outstanding CEBA loans’
CFIB yet again expressed its disappointment over the federal government’s decision to no longer extend the deadline.
"Ottawa failed to address the most critical issue on outstanding CEBA loans – the loss of the forgivable portion. I believe the government will regret the decision to not grant more time as small businesses fail and default on their entire loan. For many businesses, CEBA will be the straw that breaks the camel's back," said Dan Kelly, CFIB president.
In July 2023, CFIB and the Canadian Chamber of Commerce sent a letter to Chrystia Freeland, deputy prime minister and minister of finance asking to extend the CEBA repayment deadline by “two years to the end of 2025, or at least by one year, while maintaining access to the forgivable portion.”
CFIB also noted that its advocacy and push for an extension has garnered support from all 13 Canadian premiers and three federal parties: The New Democratic Party, Bloc Quebecois and the Green Party. They also got over 57,000 signatures on CFIB's petition.
The group also said that “the whole process around CEBA has been a mess right from the start”.
“Even now, many bank staff do not understand the process around the refinancing extension to March 28. CFIB is urging all businesses looking to use this provision to send an immediate written request for refinancing to their original CEBA bank and keep any documentation they've submitted,” it explained.
According to a CFIB survey of more than 500 members conducted just before Christmas 2023, 41% said they will not be able to repay their CEBA loans by the deadline, CTV News previously reported.
And one in five businesses in Alberta are most likely going to close because of the CEBA repayment, Andrew Sennyah, the Alberta senior policy analyst for the CFIB, said in the CTV News report, citing data generated by the CFIB.
"We are calling on government to give small businesses every benefit of the doubt given the lack of clarity and consistency from government and the banks," Kelly said.
'It's very frustrating to hear businesses looking for more'
However, at least one business owner is siding with the federal government’s decision for no more extension.
"It's very frustrating to hear businesses looking for more, and it's also relatively understandable, right?" said CEBA loan recipient Thomas Watson. His company, Guardsman Insurance Services, in Ottawa, took out a CEBA loan and paid it back as of Dec. 31, 2023, according to the CBC report.
Watson added that he is sympathetic to those who cannot pay back the loans at this time.
But "it would be unfair to forgive unpaid balances because in effect, you'd be penalizing the businesses that did what they needed to do to get those loans paid back," said Watson.
At the same time, he acknowledged his insurance business faces different cost pressures than other small enterprises such as restaurants.
