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Canada is giving small businesses in Canada more time to pay back emergency loans offered during the COVID-19 pandemic, Prime Minister Justin Trudeau announced Thursday.
The Liberals have decided, after consistent calls from businesses, to give them another year to pay back their Canada Emergency Business Account (CEBA) loans, despite previously taking the position that repayment deadlines were “final and cannot be changed.”
“We know that some need a bit more runway,” Trudeau said.
Groups across Canada representing hundreds of thousands of small businesses have been pleading with the federal government to grant them an extension.
The federal government created CEBA early in the pandemic as one of a suite of financial aid measures aimed at keeping businesses afloat in the face of forced closures and health restrictions.
Offering initially up to $40,000 to small businesses and non-profits that have experienced a loss of revenue due to COVID-19, an expansion was then granted, seeing businesses able to apply to receive up to $60,000 interest-free loans.
Open for applications between April 2020 and June 2021, the loans were approved for 898,271 businesses, totalling $49.2 billion in federal assistance.
In January 2022, in the wake of the Omicron variant surge and new restrictions, the Liberals announced they would be extending the repayment deadline by a year to the end of 2023. This meant that eligible businesses “in good standing” would have until Dec. 31, 2023 to repay and be eligible for debt forgiveness of one-third—up to $20,000—of their loan.
When the initial extension was announced, the government said outstanding loans after the 2023 deadline would be converted to two-year term loans with a five per cent interest rate, starting on Jan. 1, 2024, with the loans due in full by Dec. 31, 2025.
The local chambers of commerce, tourism and industry groups that have been imploring the government to grant this loan repayment leniency made the case that while the government gave business in crisis a lifeline with these loans. Years later, many still are treading water in their post-pandemic recoveries.
This has left many unable to make much more than a dent in the debt they’ve taken on, in the face of supply chain and hiring woes, as well as high inflation. Without the extension, many local businesses—particularly in the tourism sector—were facing the prospect of closing their doors for good.
NDP Leader Jagmeet Singh has also called on the federal government to extend the deadline.
Prior to Thursday’s announcement, Deputy Prime Minister and Finance Minister Chrystia Freeland’s office said it was aware of small businesses’ concerns but offered no indication the minister was considering extending the loan repayment deadline.
As of May 31, approximately 21 per cent of businesses that received a CEBA loan had fully repaid.
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