Survey reveals that three quarters of Canada's SMEs are struggling to clear their pandemic support loans by the end of the interest-free period
Millions of Canadian businesses face interest on the amounts borrowed to help them survive the pandemic.
The interest-free period for Canada Emergency Business Account (CEBA) loans ends on December 31, 2023, and from then interest will be due on the forgivable portion of up to $20,000.
As of mid-March, just 10% of respondents to a recent survey from the Canadian Federation of Independent Business (CFIB) said they have paid off their CEBA loan completely and 47% said they will do so by the end of the year.
But that leaves a significant share of those with the emergency loans with interest being added to the amount they owe.
A strong majority (72%) of small businesses need to see CEBA repayment rules extended, with 30% preferring a deferral of one year and 42% preferring two years, according to recent CFIB data.
Extended period
CFIB is urging Ottawa to extend the interest-free period for at least another year as almost half of businesses still have revenues below their pre-pandemic norm.
"Many small businesses are trying to repay their COVID-related debt, while facing an onslaught of additional challenges,” said Dan Kelly, CFIB president. “High interest rates, inflation and labour costs are all making it hard for small businesses to keep their head above water, let alone make any dent in the debt they were forced to take on to survive pandemic restrictions."
Kelly warned that without further support some businesses may be forced to close, with those in hospitality, arts and recreation, retail and social services most impacted by continued weakened revenues.
