But around 50,000 more may lose the forgivable portion this week
It’s been four years since the start of the pandemic that shut down the world and left businesses fighting for their existence, but for some, the fight goes on.
With the last two years adding extra challenges to Canada’s small business owners due to the cost of doing business, many have been forced to take on new debt to refinance the loans they took out to help them through Covid.
The deadline to keep the forgivable portion of the Canada Emergency Business Account (CEBA) loan was January 18, 2024, but those that applied to the financial institution that provided their loan were granted a special extension to March 28, although they could choose to secure alternative financing rather than continue with their existing FI.
The Canadian Federation of Independent Business says that 200,000 small businesses have taken on new debt to refinance their CEBA loans, but another 50,000 only have until tomorrow to do so or face 5% interest on the entire loan without the forgivable portion of up to $20,000.
"Many of those businesses that had to borrow to repay their CEBA loans are facing high interest rates and will be challenged to meet their payment obligations," said Dan Kelly, CFIB president. "We need to remember while government got a lot of CEBA balances repaid, the debt for many businesses didn't suddenly go away – it just shifted from a low interest government-backed loan to a higher interest bank loan. This should sound the alarm for policymakers, particularly given the business insolvencies are surging."
Research from the CFIB shows that 20% of Canada’s small business owners are concerned about the financial situation of their business and recent stats revealed that business insolvencies have increased sharply.
In light of this, the CFIB is calling on Ottawa to:
- Implement a review process for CEBA loan holders deemed ineligible and introduce a three-year repayment plan.
- Ensure the maximum flexibility is used for those who have attempted to take out a refinancing loan to use the special extension to March 28. CFIB urges banks to accept any form of communication requesting refinancing as sufficient proof for the extension.
- Look at new ways to lighten the debt load for those who were unable to meet the January 18 deadline.
Corinne Pohlmann, executive vice-president of advocacy at CFIB, says that the help is urgently needed.
"Small business owners face massive debt loads and cost increases, and many feel abandoned by the government and the way it handled the repayment of the CEBA program,” she said. “Ottawa should do more to help them deal with the high cost of doing business and provide concrete financial relief measures in the upcoming federal budget, such as lowering the Employment Insurance premiums for small employers and returning the $2.5 billion in carbon tax revenue owed to small businesses.”
