Pandemic small business loan repayment deadlines extended by one year
The federal government has extended the repayment deadlines for the Canada Emergency Benefit Account (CEBA) loan by an additional year.
The loans were made available from April 9, 2020, to June 30, 2021, to assist small businesses during the COVID-19 pandemic and allow businesses to apply for loans of up to $60,000.
The federal government said this helped nearly 900,000 small businesses and not-for-profit organizations cover operating costs during the pandemic.
Initially, businesses had to pay back their loans by the end of 2022. The deadline was then extended to December 31, 2023.
The Canadian Federation of Independent Business, which processes CEBA applications and loan repayments, said those who paid their loans before that December 2023 deadline would not be charged interest and could have up to $20,000 of their loans forgiven.
Now the deadline has been extended by a few weeks to January 18, 2024, “recognizing that the end of December is a busy time for many Canadian businesses,” noted the federal government in a release.
For those who accessed the CEBA loan and can make a refinancing application with the financial institution that provided their loan by January 18, 2024, they’re repayment deadline to qualify for partial loan forgiveness will be extended to March 28, 2024.
The federal government also announced that by January 19, 2024, outstanding loans will convert to three-year term loans, subject to 5% interest per year. The term loan repayment date will also be extended to December 2026.
“Put simply, small businesses and not-for-profits will automatically have access to a three-year, low-interest loan of up to $60,000 if they have not repaid or refinanced their loan,” said Canada’s Department of Finance.
In a statement, the Canadian Federation of Independent Businesses (CFIB) said the government’s extension is “not good enough.”
“The government has failed to address the most critical issue on outstanding CEBA loans – the loss of the $20,000 forgivable portion for those unable to repay the loans by year end,” stated the CFIB.
“The extension of the forgivable deadline by a few weeks will be of very little value to the thousands of small business owners who just don’t have money to repay now.”
The CFIB said that according to its data, 69% of businesses that accessed the loan have been unable to repay any of it and only 18% have repaid the loan in full as of September.
With files from Imaan Sheikh
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