Extension of Pandemic Small Business Loan Repayment Deadlines by Canada Government

15 Sep, 2023

Extension of Pandemic Small Business Loan Repayment Deadlines by Government

Canadian Prime Minister Justin Trudeau has revealed that the government is extending the repayment deadline for the small business pandemic loan program by one year. However, businesses will still lose the forgivable portion of the loan if they fail to repay it in the coming months.

The Canada Emergency Business Account (CEBA) was introduced during the height of the pandemic to provide assistance to small businesses that were forced to close or limit their operations due to public health measures. The program offered interest-free loans backed by the federal government, allowing businesses to apply for up to $60,000. A crucial feature of the program was that up to $20,000 of the loan would be forgiven if the remaining amount was repaid by a specific deadline. Initially, this repayment deadline was set for the end of 2022, but it was later extended to the end of 2023.

For businesses that missed the extended deadline, interest would start accruing, and they would be required to repay the loan in full by the end of 2025. However, this deadline has now been pushed further to the end of 2026.

Prime Minister Trudeau noted, "While many have repaid these loans, we recognize that some need more time." As part of the extension, businesses will have until January 18, 2024, to qualify for debt forgiveness. Those who refinanced their loans will receive an extension until March 28 to meet the forgiveness criteria. However, it's important to note that all loans will begin accruing five percent interest if not repaid by January 19.

The CEBA program has had a significant impact, with nearly 900,000 businesses approved for loans totaling over $49 billion. Nevertheless, as of May 31, only 21 percent of these businesses had fully repaid their loans.

The government has faced mounting pressure from various business advocacy groups to extend the repayment deadline beyond 2023, while others have called for complete forgiveness of the outstanding loans.

The Canadian Federation of Independent Business expressed disappointment with the government's announcement, emphasizing the critical issue of the loss of the $20,000 forgivable portion for those unable to repay by year-end. They argued that a slight extension in the forgiveness deadline would offer little help to struggling small business owners.

The Tourism Industry Association of Canada shared similar sentiments, stating that a mere three-month extension for loan forgiveness did not align with the severity of the economic crisis faced by businesses.

However, some advocates viewed the announcement more positively. Barbara Barrett, the executive director of the Frontier Duty Free Association, representing 32 land border duty-free stores in Canada, saw the extensions as potential lifelines for some members. She pledged to continue advocating for total loan forgiveness.

Perrin Beatty, president of the Canadian Chamber of Commerce, interpreted the announcement as a sign that the government was responsive to business concerns. He emphasized that the Chamber would closely monitor the implementation of the extension, hoping it would provide stability and certainty to businesses as they work towards recovery.

The extension of the CEBA loan repayment deadline was part of a series of new measures announced by Prime Minister Trudeau, aimed at addressing concerns about the rising cost of living, particularly as the governing Liberals contend with declining poll numbers.

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