by MorinvilleNews.com Staff
Thursday marks the last day of the federal government’s special extension on Canadian Emergency Business Account (CEBA) loan repayments in order for businesses to keep the forgivable portion of those pandemic loans. The Canadian Federation of Independent Business (CFIB) has learned that 200,000 small businesses (or 23%) were forced to take on new debt to refinance their CEBA loans to retain access to the forgivable portion.
“Many of those businesses that had to borrow to repay their CEBA loans are facing high-interest rates and will be challenged to meet their payment obligations,” said CFIB President Dan Kelly in a media release Tuesday. “We need to remember while the government got a lot of CEBA balances repaid, the debt for many businesses didn’t suddenly go away – it just shifted from a low-interest government-backed loan to a higher-interest bank loan. This should sound the alarm for policymakers, particularly given the business insolvencies are surging.”
CFIB data indicates things are far from back to normal for many businesses. Twenty per cent of CFIB members surveyed indicate their financial situation is the primary concern. Business insolvencies have jumped by 129.3 per cent in January of 2024 over the previous year and that more businesses closed in December of 2023 than opened.
CFIB wants the feds to implement a review process for CEBA loan holders deemed ineligible and introduce a three-year repayment plan, ensure maximum flexibility is used for those who have attempted to take out a refinancing loan to use the special extension to March 28. They also call on banks to accept any form of communication requesting refinancing as sufficient proof for the extension.
“Small business owners face massive debt loads and cost increases, and many feel abandoned by the government and the way it handled the repayment of the CEBA program. Ottawa should do more to help them deal with the high cost of doing business and provide concrete financial relief measures in the upcoming federal budget, such as lowering the Employment Insurance premiums for small employers and returning the $2.5 billion in carbon tax revenue owed to small businesses,” said CFIB’s Executive Vice-President of Advocacy Corinne Pohlmann in the same release.
CFIB has more info for CEBA loan holders on the CFIB’s website.
