Ottawa extends CEBA loan repayment deadline by one year

The extension had been a key demand from business groups, as many small businesses in hard-hit sectors feared they would not be able to repay loans on time.CHRISTINNE MUSCHI/Reuters

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

Prime Minister Justin Trudeau said at a press conference Wednesday that businesses now have until Dec. 31, 2023 to repay loans without accruing interest and to qualify for partial loan forgiveness. The previous repayment deadline was December 31, 2022, to avail these loan benefits.

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

In a press release, the government said that all loans not repaid by the new deadline of December 31, 2023 will be converted into two-year term loans with 5% interest from January 1, 2024. The loans will be fully due by December 31, 2025.

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

The extension had been a key demand from business groups, as many small businesses in hard-hit sectors feared they would not be able to repay loans on time.

Dan Kelly, president of the Canadian Federation of Independent Business, said the announcement was good news. CFIB also lobbied the government to cancel a greater share of CEBA loans and provide more credit through the program.

“It will be a critical relief for business owners who were really stressed about this,” 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 drags on into a third year.

“We need to be lucid about the impacts of this ongoing fifth wave and the very real threat of a third consecutive tourist season being lost,” Ms Drigola Birk said.

The Chamber of Commerce and CFIB are asking the government to extend the repayment deadline by one year, until December 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 companies had already repaid the loan, but suggested that very few would do so until as the deadline approaches.

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

A recent report from the Auditor General of Canada said the Regional Relief and Recovery Fund has largely met its goals of supporting hard-hit businesses.

The audit also said the government expected that between 25% and 42% of loans made through the Regional Relief and Recovery Fund would never be repaid. The program had a total budget of over $2 billion.

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