The federal government says it is extending the final repayment deadline for Canada Emergency Business Account loans by one year, though the relief has received a mixed response from small-enterprise groups that say the specifics are insufficient.
CEBA was the most widely used pandemic support program for businesses, through which Ottawa provided loans of either $40,000 or $60,000 to nearly 900,000 enterprises in 2020 and 2021.
The first repayment deadline was set for Dec. 31. Businesses that repaid by then would have either $10,000 or $20,000 of the loan forgiven. As of Jan. 1, nothing would be forgiven, and interest would begin to accrue at 5 per cent. Loans were due in full by Dec. 31, 2025.
Those deadlines have now been pushed to give businesses a little bit of relief, Prime Minister Justin Trudeau announced Thursday in London, Ont.
The initial repayment deadline is moving to Jan. 18, 2024, to get businesses through the busy holiday season. And the final deadline will be extended by a full year to Dec. 31, 2026.
The government is also setting another deadline: If a business is in talks with their financial institution to refinance their loan, they can still have it partially forgiven as long as those negotiations are completed by March 28, 2024.
“These are really providing small businesses flexible options and more time to be able to make the arrangements they need,” Small Business Minister Rechie Valdez said in an interview.
This is the second time that Ottawa has pushed back the deadline. Small businesses have been putting pressure on politicians to relax repayment terms, as many in the hardest-hit industries are still recovering from the economic damage wrought by the pandemic.
More than 256 business groups wrote to the government this summer asking for an extension, and Liberal members of Parliament pressed Mr. Trudeau to make the change during the fall caucus retreat this week.
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But there was some concern from some small-business groups that the extensions weren’t long enough.
Dan Kelly, president of the Canadian Federation of Independent Business, said he was disappointed and his group would continue advocating for more relief.
“It is helpful that the government has given business owners an additional year to repay the full balance of the loan, but the plan misses the most central issue – the loss of the forgivable portion,” he said in a statement.
Beth Potter, president of the Tourism Industry Association of Canada, said the length of the extension was not commensurate with the severity of the crisis.
“This falls short of adequately addressing the immense financial strain and uncertainty that our members are experiencing,” she said in a statement.
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Perrin Beatty, president of the Canadian Chamber of Commerce, said the announcement signalled the government was listening to small businesses and responding to some of their concerns.
“The Chamber will continue to closely monitor the implementation of today’s announcement, which we hope will provide some of the stability and certainty businesses need to get back on their feet, continue strengthening their communities, and put Canada on a path to prosperity,” he said in a statement.
Only about a fifth of CEBA recipients have repaid their loans as of June 30, according to the most recent Statistics Canada data. Nearly $39-billion in loans are still outstanding.
About two-thirds of small and medium-sized businesses took out a CEBA loan, according to one government study. That proportion was higher in industries most affected by lockdowns, such as food services, tourism and retail.