The deadline to repay Canada Emergency Bank Account (CEBA) loans or apply for refinancing and qualify for partial forgiveness is hours away.
About 900,000 businesses received roughly $49 billion from the federal government in CEBA loans, which were introduced during the pandemic to help Canadians weather the financial storm caused by COVID-19 lockdowns.
Under the program, businesses could apply for up to $60,000 in interest-free loans. The government has extended the loan repayment deadline twice already and payments were originally due Dec. 31, 2022.
CEBA loan holders who pay back their loan or apply for refinancing on Jan. 18 will qualify for up to $20,000 of loan forgiveness and pay no interest. Those who apply for refinancing by Jan. 18 must pay their loan back minus the potential forgiveness amount by March 28 in order to qualify. Any loan holders with outstanding payments as of Jan. 19 will have until the end of 2026 to pay their loans back in full, along with five per cent interest per year.
Despite calls from the Canadian Federation of Independent Business (CFIB) for another extension, Prime Minister Justin Trudeau, speaking to reporters Wednesday, held firm on the deadline.
“We understand that things — even as the economy has bounced back from COVID — continue to be challenging, which is why we extended, twice, the repayment deadline for the CEBA loans. But we are now far enough from the pandemic that we do have to wrap up pandemic programs,” Trudeau said.
“If they can’t quite make it by the 18th, there are plenty of financial institutions who are there to give low-cost loans to be able to benefit those businesses as they continue to repay it over the coming years.”
CFIB president Dan Kelly previously said the federal government should extend the deadline again.
“Canada has had the longest lockdown of any country in the entire world, and as a result, businesses have mountains of debt — not just in CEBA loans,” Kelly told CTV National News Tuesday.
“They’re not back to recovery,” he added.
Minister of Small Business Rechie Valdez told host Vassy Kapelos on CTV News Channel’s Power Play Wednesday that small businesses can choose from the “range of repayment options” to suit what works best for them.
“If they’re able to pay by tomorrow, Jan. 18, they can get up to the $20,000 of forgiveness, but if they’re unable to pay the entirety, they can meet with their financial institution and seek refinancing. And as long as their application is in with their financial institution, they have until March 28, because it takes time for the loan adjudication to take place. They can still access that forgivable portion of the loan,” Valdez explained.
As of Jan. 15, the government estimates nearly 70 per cent of CEBA loans have been repaid. However, the actual percentage won’t be determined until after the deadline passes. Valdez echoed the prime minister and said the government is moving away from pandemic programs.
“We understand that small businesses continue to struggle, but we need to ensure that we balance our support for small businesses with fiscal responsibility. CEBA, again, was meant to keep small businesses afloat during the pandemic,” Valdez said.
With files from CTV National News Ottawa Correspondent Judy Trinh
