The CEBA business loan deadline of Jan 18 is seeing many businesses moving their loans to their respective financial institutions – for refinancing if not paid off. Businesses have until the end of March to conclude those new loan details which then trigger the release of the forgiveness portion of the loan.
Loan holders have the choice to pay out in full by January 18 and get credit for the forgiveness portion, or by January 18 secure an application for a refinanced loan which allows the principal to be paid out by March 28th, allowing the loan holder to still access the forgiveness portion. Canadian Chamber of Commerce research statistics from late fall 2023 indicated that 19% of Canadian businesses were having difficulty meeting the government payment deadlines.
Smaller Businesses, Bigger Impact
The deadline is more bad news for smaller businesses, especially, which are battling to survive post-pandemic with tax increases at every level, in addition to reviving their businesses. Inflation, rising costs, taxes and now CEBA repayments are, according to the Daily Courier’s Ross Freake, “creating a perfect storm for those small businesses.”
Four years after the federal government lent $49 billion to nearly 900,000 businesses as COVID-19 took hold, those loans are coming due. The repayment is a major landmark for CEBA and will provide an economic indicator of what the impact is on small business. Economic analysts have been expressing concerns that the repayment difficulties this deadline will cause many small businesses could further restrict an already struggling economy.
The senior director of Canadian economics at Desjardins Group earlier this week said of the repayment, “We think it is going to weigh on the economy and exacerbate any sort of weakness that we see in the next year.”
What Chambers of Commerce are saying
Perrin Beatty, President of the Canadian Chamber of Commerce, said this week that “The program was essential, and it saved a very large number of businesses.” The government has twice moved the repayment deadline back as business organizations including the Kelowna Chamber called for the government to not put struggling businesses in peril. Pandemic-affected businesses – restaurants, personal care businesses such as hair salons, hiring consultancies and others – were hit particularly hard. Some larger businesses got by with less difficulty, with their economies of scale.
Businesses must repay their loans by Thursday of this week to trigger partial forgiveness: $10,000 for loans of $40,000; or $20,000 for loans of $60,000. If refinancing is being negotiated, the deadline moves to March 28; if unpaid, loans begin accruing interest at 5% annually. Unpaid CEBA loans will be moved to the CRA for management and repayment after the final March 28 deadline.
Dan Rogers, CEO of the Kelowna Chamber, said of the CEBA repayment deadlines, “It is affecting these small, family-owned businesses to a far greater degree than the larger ones that have economies of scale and that is a big issue that we are flagging, not just with the federal government, but also the provincial government.”
“Losing more from that particular group will not serve our economy in the longer term. We’re monitoring it and we’re encouraging the provincial and federal governments to also monitor this and come up with responses to help some of these small businesses with the perfect storm that is brewing over their heads from now.”
Full details of the CEBA loans program and its repayment deadline are available on the government website.