A hand painted sign about the Canada Emergency Business Account is seen in the front window of Frances Watson, a store on Queen St. West, on April 15, 2020.Fred Lum/the Globe and Mail
Small-business groups are asking the federal government to further 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.
Ottawa announced the creation of the CEBA program on April 9, 2020, and sent more than $49-billion to almost 900,000 businesses. It was the first and most widely used pandemic support program for businesses.
The original repayment deadline for the interest-free, partially forgivable loans was Dec. 31, 2022; after that, businesses would start paying interest and forfeit the forgivable portion of the loans. Last year, citing the challenges posed by the Omicron variant, Ottawa extended the deadline by 12 months.
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, representing $5.7-billion, were repaid as of the end of November, 2022. EDC first provided these figures to CBC.
The reason: Many of those businesses are still struggling with debt incurred during the pandemic, business groups say.
Olivier Bourbeau, Restaurants Canada’s vice-president of Quebec and federal affairs, said his association recently surveyed its members and found that 20 per cent of those who had not yet repaid their CEBA loans were not sure they ever could. About 30 per cent of its members reported having pandemic-related debt of more than $100,000.
Data from the Office of the Superintendent of Bankruptcy show 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 interest-free and partly forgivable ($10,000 for the smaller loans, $20,000 for the larger ones) if the balance is repaid by Dec. 31, 2023. After that, the forgivable portion is forfeited, interest begins to accrue at a 5-per-cent rate, and the loan goes to collections if not repaid in full by Dec. 31, 2025.
Restaurants Canada has proposed the government phase out the loan forgiveness over six-month periods, so that