The Canadian Federation of Independent Business (CFIB) is sounding the alarm as the deadline to repay Canada Emergency Business Account (CEBA) loans gets closer.
CEBA was a financial assistance program introduced during the pandemic to help small businesses stay afloat with loans of up to $60,000. The deadline to pay off this loan is December 31, 2023.
“For eligible CEBA borrowers in good standing, repaying the balance of the loan on or before December 31, 2023, will result in loan forgiveness of up to 33% (up to $20,000),” reads the CEBA website.
The CFIB says that this deadline must be extended if Canada doesn’t want to lose nearly 250,000 small businesses, which make up at least 19% of the country’s small businesses.
“If the deadline isn’t extended, small businesses will lose the forgivable portion as of December 31, 2023, which will add up to $20,000 more to their debt and cause them to face 5% interest on the full balance,” the CFIB warned in a report published Wednesday.
In the report titled “Back in Business? Spring Update on Small Business and CEBA,” the federation outlines that only 10% of applicants have repaid their CEBA loans, and 42% risk missing the current repayment deadline.
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“Of the nine in 10 small businesses who used CEBA, three quarters accessed loans between $40,001 and $60,000, while one quarter received loans of up to $40,000,” the report further states.
The small businesses most likely to miss this deadline belong to sectors like arts, recreation, and information (62%), hospitality (61%) and social services sectors (46%). Half of businesses with less than four employees could miss it, too.
CFIB said that of the 47% of small business owners who indicate they will meet the 2023 deadline, half say they will “struggle to do so,” and two-thirds would like a deadline extension.
“The message from small businesses is loud and clear: they need more time to repay their CEBA loan,” said CFIB President Dan Kelly. “Financial institutions still have time to delay repayment processes if the government extends the CEBA deadline, but that window is closing. Ottawa needs to act now.”
The loans were provided through 220 financial institutions in Canada.
Now, CFIB is demanding the government do the following to preserve the country’s small businesses:
- Extend the repayment deadline for the CEBA loan to the end of December 2025 or at least 2024
- Consider additional debt forgiveness
- Implement an appeal process for CEBA loan recipients that are now deemed ineligible
There is also a CFIB petition small business owners can sign to extend the CEBA repayment deadline.
In May, the petition received 3,500 new signatures. Since its inception, 23,000 people have signed it.
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