As the deadline for repaying pandemic loans and seeking partial forgiveness approaches, small businesses in Canada are expressing a strong desire for the federal government to reconsider and extend the deadline for another year. During the COVID-19 pandemic, nearly 900,000 organisations applied for and received loans under the Canada Emergency Business Account (CEBA) program. This federal initiative provided interest-free loans of up to $60,000 to assist businesses and non-profits in navigating the financial challenges posed by pandemic-related shutdowns and slowdowns.
Up to one-third of these loans can be forgiven if businesses repay the outstanding amount by January 18, 2024. Missing this deadline would result in the loss of the forgivable portion, and the debts would be converted into three-year loans with an annual interest rate of five percent. Alternatively, businesses were given the option to refinance their loans with a financial institution, and those who did so have until March 28, 2024, to meet the requirements and remain eligible for the loan forgiveness portion.
Small business groups have been consistently advocating for an extension, citing ongoing challenges faced by small businesses in the post-pandemic period. However, with just over two months remaining until the deadline, the likelihood of another extension is diminishing.
Federal support has played a vital role during the COVID-19 pandemic, but small businesses are still grappling with rising costs, labor shortages, and persistent operational challenges, as pointed out by Kate Fenske, Chair of the International Downtown Association of Canada.
The federal government has already made several changes to the CEBA program to provide more flexibility for businesses recovering from the pandemic. These changes included extending the deadline for loan repayment by an additional year to December 31, 2023, and, more recently, pushing back the eligibility deadline for CEBA loan forgiveness to ease holiday season pressures.
Despite warnings from Export Development Canada about administrative burdens, the government made these extensions. CEBA is structured as a repayable loan program, which complicates the process of building and implementing forgiveness extensions.
Small business owners, nearly 20% of whom have already repaid their loans, are facing significant pressure. The consequences of not granting another extension could be dire for the survival of many small businesses.
Calls for an extension have received political support from all 13 provincial premiers, as well as from the federal NDP, Bloc Québécois, and Greens. The premiers jointly wrote a letter to Prime Minister Justin Trudeau last month, urging the federal government to provide more time for small businesses to benefit from loan forgiveness and extend the repayment of CEBA loans for another year.
The federal Conservatives have not yet articulated a position on the CEBA loans and the calls for an extension, which small business advocates find disappointing. Time is running out, but there is still hope that the federal government may reconsider its stance, particularly during the upcoming fall economic statement. Small business advocates point to past policy changes in response to pressing issues and hope for a similar reversal in this case.