Small-business groups are asking the federal government to extend the deadline for repaying Canada Emergency Business Account loans when the budget is tabled later this month, as few of the loans have been paid back.
On April 9, 2020, Ottawa announced the creation of the CEBA program and sent more than $49 billion to almost 900,000 businesses. The first and most widely used pandemic support program for companies has been launched by the World Health Organization.
The original repayment date for the interest-free, partially forgivable loans was Dec. 31, 2022, when businesses would start paying interest and forfeit the forgivable portion of the loans. Ottawa extended the deadline by 12 months last year, citing the challenges posed by the Omicron variant.
But almost three years after the program began, most of the loans are still outstanding. Export Development Canada, the crown corporation that oversees CEBA, told The Globe and Mail that just 13 per cent, or $5.7 billion, were repaid as of the end of November, 2022. EDC first released the figures to the CBC.
Many of those companies are still grappling with debt incurred during the pandemic, business groups say.
Olivier Bourbeau, restaurant's vice-president of Quebec and federal affairs, said his association recently surveyed its members and found that 20 percent of those who hadn't yet repaid their CEBA loans were not sure they ever could. About 30 percent of its members reported having debt of more than $100,000.
Data from the Office of the Superintendent of Bankruptcy shows that there were 533 insolvencies in the accommodation and food-services sector in the 12 months ending Jan. 31, up from 377 in the prior 12 months, an increase of 41 per cent.
Under the current rules, CEBA loans are worth either $40,000 or $60,000 and are subject to interest-free and partly forgivable if the balance is repaid by Dec. 31, 2023. The interest will continue to accrue at a 5 percent rate, and the loan goes to collections if not paid in full by Dec. 31, 2025.
The government has proposed that restaurants Canada phase out the loan forgiveness over six-month periods so that even financially strapped businesses that can't meet the 2023 deadline can still benefit from some forgiveness. Bourbeau said it would help resolve one of CEBA's problems - namely, that businesses in the best financial shape right now are more able to reap the benefits of the program than those that need help the most.
I never want to speak about COVID ever again - I don't think that's a wise idea because of the anchors of debt hanging around the necks of hundreds of thousands of small business owners right now.
The CFIB is seeking the government to extend the loan-forgiveness deadline to Dec. 31, 2024.
The group also wants the government to extend partial loan forgiveness to 50,000 businesses that were told they never should have gotten a CEBA loan in the first place and had to repay the full amount.
The budget is due to be tabled on March 28.
EDC spokeswoman Louis-Antoine Paquin saidCEBA was created in partnership with private companies, making it challenging to track repayments.
In the year 2020-21, EDC reported that financial institutions were also paid a total of $92 million in administrative fees.