As business owners struggle to pay back pandemic loans, local advocates aren’t giving up hope that the federal government will extend the upcoming deadline for partial loan forgiveness.
However, a spokesperson for Minister of Finance Chrystia Freeland gave little indication that the government is reconsidering its stance.
“When the COVID-19 pandemic hit, the federal government acted swiftly to provide emergency support and ensure that Canadians and Canadian businesses could weather the storm. The (Canada Emergency Business Account) programme, which delivered over $49 billion to more than 890,000 small businesses and non-profits across the country, was an essential part of that effort,” said Katherine Cuplinskas, senior communications advisor and press secretary to Minister Freeland, in a statement to OBJ Thursday.
To better understand the issues preventing business growth and economic stability, the most critical piece of the puzzle is often people.
“To continue helping those hardest-hit by the pandemic, we announced that the CEBA repayment deadline was extended by one year to Dec. 31, 2023. This programme was central to ensuring Canadian small businesses were able to not only survive the pandemic but thrive in the recovery.”
The CEBA program allowed businesses to receive interest-free loans of up to $60,000, of which up to $20,000, or 33 per cent, would be forgiven if the business repaid the outstanding balance by the end of 2023. Otherwise, the debt will be converted to a two-year loan with interest of five per cent annually. The initial deadline of Dec. 31, 2022 was extended by the federal government by one year.
But advocacy groups such as the Ottawa Coalition of Business Improvement Areas (OCOBIA) say business owners are worried.
“Business owners are becoming increasingly stressed,” said Michelle Groulx, OCOBIA’s executive director. “They are now being approached by various financiers to move their loans. It doesn’t lend to any confidence that the CEBA loan and forgiveness portion will be extended.”
The Canadian Federation of Independent Business (CFIB) has also been calling for a deadline extension and is going to “continue to put pressure” on the government, said vice-president of national affairs Jasmin Guenette.
“Businesses are extremely worried. We have to remember that nine out of 10 small businesses took the CEBA loan and, based on our recent research, only 10 per cent have fully repaid,” said Guenette.
Canadian businesses took out an average of $100,000 in loans due to the pandemic, Guenette said, and surveys by the CFIB show that about half of businesses are still earning less than they were prior to COVID.
“It’s a difficult situation,” Guenette said. “A huge number of businesses have a huge amount of debt because of the pandemic.
“On the one hand, you have businesses making less sales, on the other, you have them in debt and, on top of that, inflation, interest rates going up, salary expenses going up. You have a recipe for disaster almost,” he continued. “Maybe the word is too strong, but many businesses are having a hard time staying afloat.
“The right policy is for the government to extend the CEBA deadline to provide more time for businesses to repay and to really get back on two feet following the pandemic.”
A petition created by the CFIB is requesting that the deadline be extended by at least another year, but “whether or not they will do something, only Minister Freeland knows at this point,” said Guenette.
“But we have not heard anything.”