Ottawa extends deadline to repay CEBA loans by one year

The federal government is giving small businesses an extra year to pay back their Canada Emergency Business Account loans, one of the most widely used business supports during the pandemic.

Prime Minister Justin Trudeau said at a Wednesday news conference that businesses now have until Dec. 31, 2023, to repay the loans without accruing interest and to qualify for partial loan forgiveness. The previous repayment deadline was Dec. 31, 2022, to take advantage of those loan perks.

The CEBA program was announced in April, 2020, to provide emergency loans of $40,000 to eligible small businesses, with $10,000 of that forgivable if repaid on time. The limit was later raised to $60,000 and the forgivable portion adjusted to $20,000. Nearly 900,000 businesses have received the loans, with a total value of more than $49-billion.

In a press release, the government said any loans not paid by the new Dec. 31, 2023, deadline will be converted to two-year term loans with 5-per-cent interest starting on Jan. 1, 2024. The loans will be fully due by Dec. 31, 2025.

“Extending it to 2023 will give businesses that flexibility in order to manage their cash flows,” said Small Business and Economic Development Minister Mary Ng, who was also at the announcement.

The extension had been a top request of business groups because many small businesses in hard-hit industries were worried they would not be able to repay the loans in time.

Dan Kelly, president of the Canadian Federation of Independent Business, said the announcement was good news. CFIB has also been lobbying the government to forgive a larger share of the CEBA loans and to extend more credit through the program.

“This will be a critical relief for business owners who were really stressed about it,” Mr. Kelly said.

Alla Drigola Birk, director of small-business policy for the Canadian Chamber of Commerce, said government supports are still needed in many sectors as the pandemic stretches into a third year.

“We need to be clear-eyed about the impacts of this ongoing fifth wave and the very real threat of a third tourism season in a row that will be lost,” Ms. Drigola Birk said.

Both the Chamber of Commerce and CFIB are calling on the government to extend the repayment deadline another year, to Dec. 31, 2024.

The Tourism Industry Association of Canada and Restaurants Canada also welcomed the extension.

Export Development Canada, the Crown corporation that administers the CEBA program on behalf of the federal government, declined to tell The Globe and Mail in December how many businesses have already repaid the loan, but suggested very few would until closer to the deadline.

The deadline extension will also apply to loans extended through the Regional Relief and Recovery Fund, which was a program similar to CEBA that was administered by Canada’s regional development agencies.

A recent report by the Auditor-General of Canada said the Regional Relief and Recovery Fund largely fulfilled its goals of providing support to hard-hit businesses.

The audit also said the government expected that between 25 per cent and 42 per cent of the loans provided through the Regional Relief and Recovery Fund would never be repaid. The program had a total budget of more than $2-billion.