Supporters of businesses argue that the government needs to extend the deadline further to qualify for partial forgiveness.
Prime Minister Justin Trudeau announced that the federal government is extending the deadline for debt repayment for the Small Business Emergency Loan Program (CEBA) by another year – but businesses will still forfeit a portion of their loan forgiveness if they do not repay their debt within the next few months.
The Canada Emergency Business Account (CEBA) was launched during the peak of the pandemic to assist small businesses forced to close or limit operations due to public health measures. The program provides interest-free loans supported by the federal government.
A business can apply for up to $60,000 through the program, with up to $20,000 forgiven if the remainder is repaid before a specific deadline. The initial debt repayment deadline was the end of 2022, which has now been extended to the end of 2023.
Any business that misses that deadline will start accruing interest and will have to fully repay the loan by the end of 2025. This deadline will now be extended to the end of 2026.
“While many have repaid these loans, we know that some need more time,” Prime Minister Trudeau said on September 14.
Businesses will get a slight extension – until January 18, 2024 – to qualify for partial forgiveness (up to $20,000). Interest at a rate of 5% will start accruing if this deadline is missed.
Nearly 900,000 businesses have been approved to participate in the program, distributing loans totaling over $49 billion. However, only 21% of these businesses had fully repaid their loans as of May 31.
The federal government has faced significant pressure from various business advocacy groups to extend the deadline to 2023. Others have called for the complete elimination of outstanding debts.
The Canadian Federation of Independent Business (CFIB) expressed disappointment with the government’s announcement.
CFIB President Dan Kelly said in a statement, “The government has failed to address the most significant issue for outstanding CEBA loans – that is the loss of up to $20,000 in loan forgiveness for those unable to repay their loans by year-end.”
“Extending the deadline by a few weeks can provide very little value to thousands of small business owners who currently don’t have the money to repay.” The CEBA announcement is part of a series of new measures that Prime Minister Trudeau announced on September 14 to address cost of living concerns as part of his role as a managing authority.