Canadian small businesses are facing a deadline to repay their Canadian Emergency Business Account (CEBA) loan before the end of the year. Paying it off before the year is over ensures zero interest is added on. Nearly three-quarters of the country’s SMEs are facing this deadline.
78% of small business owners have reported receiving a few extra months to repay the loan is essential to ensure their business stays afloat. CFIB data has also revealed that roughly 49% of SME owners continue to make below-par revenues, primarily in the hospitality, arts and recreation, and social services industries.
CFIB president, Dan Kelly, attributes high-interest rates, inflation, and labour expenses as the reason small businesses are struggling to maintain and thrive. The focus, for many Canadian small businesses, at this point, is to keep their company afloat, not prioritize the debt they took on during the COVID-19 pandemic to survive.
“Many small businesses are trying to repay their COVID-related debt, while facing an onslaught of additional challenges. High-interest rates, inflation and labour costs are all making it hard for small businesses to keep their head above water, let alone make any dent in the debt they were forced to take on to survive pandemic restrictions,” stated Kelly. “If the government helped ease their debt burden, small businesses could reinvest the money into employees or back in their business. Otherwise, we may see more business failures as businesses realize they can’t afford to stay open.”
Kelly and the CFIB claim that ten percent of SMEs surveyed by them that took on a CEBA loan have already been able to repay it in its entirety, while 47% noted they expect to successfully pay it off before the year’s end. 72% have expressed the need to see the CEBA loan repayment rules extended past the year’s end with 30% preferring a deferral of an additional year and 42% seeking another two years.
CFIB Urging Federal Government to Extend Deadline
If the CEBA loan is not repaid by December 31, 2023, SME owners can lose up to $20,000 and interest will start to accrue. The CFIB has garnered over 19,000 petitions from small business owners urging improvements to the loan and an extension. The organization has sent letters to the Deputy Prime Minister, Chrystia Freeland, urging the government to protect small business owners and offer them debt relief. “It’s not too late for Ottawa to show support to small businesses across the country,” said Corinne Pohlmann, senior vice-president of National Affairs at CFIB. “Given the uncertain economic situation and high debt loads, requiring repayment by end of this year may force many businesses to throw in the towel.”
The CFIB is asking the federal government to extend the repayment deadline for CEBA loans interest-free to the end of 2024 to 2025. The organization also calls on the government to consider additional debt forgiveness and implement an appeal process for loan recipients that are now considered ineligible.