‘No reprieve’ from CEBA repayment: CFIB

Employers hoping to get an extension for the repayment of the Canada Emergency Business Account (CEBA) are bound to be disappointed. 

This is because there is no reprieve on sight for them as the Jan. 18, 2024 deadlines nears, according to the Canadian Federation of Independent Business (CFIB).

"Following many conversations with government, I'm convinced there won't be any last-minute extension to the current January 18 deadline," said Dan Kelly, CFIB president. 

"For business owners who remain eligible, now is the time to repay if you possibly can. There's only one week left to repay the loan while securing the up to $20,000 forgivable portion. And with over 900,000 small businesses holding CEBA loans and 22% not in a position to repay at this time, this decision has huge implications for Canada's economy."

That number came from CFIB’s December 7-19, 2022 survey of over 3,000 SMBs.

The federal government previously moved the deadline for the repayment for partial loan forgiveness of up to 33% under the program to Jan. 18, 2024.

The majority of SMBs thought that the extension was not enough, a previous CFIB survey revealed. In July 2023, CFIB and the Canadian Chamber of Commerce sent a letter to Chrystia Freeland, deputy prime minister and minister of finance asking to extend the CEBA repayment deadline by “two years to the end of 2025, or at least by one year, while maintaining access to the forgivable portion.”

Several political parties supported this call for extension.

‘Most likely to close’ due to CEBA repayment

The federal government’s decision not to provide further extension would be disastrous for many businesses, according to a CFIB survey of more than 500 members conducted just before Christmas 2023, CTV News reported.

Overall, 41% said they will not be able to repay their CEBA loans by the deadline.

And one in five businesses in Alberta are most likely going to close because of the CEBA repayment, Andrew Sennyah, the Alberta senior policy analyst for the CFIB, said in the CTV News report, citing data generated by the CFIB.

Jeff Jamieson, founding board member of the Alberta Hospitality Association (AHA) and owner of Calgary’s Donna Mac restaurant, echoed the sentiment.

It’s been one battle – and cost – after the other since the beginning of COVID-19, he said in a Calgary Herald report.

“There’s gonna be some closures,” he said. “There’s gonna be some people that just decide that additional burden puts them over the edge and it doesn’t make sense anymore to carry on.”

Across the country, 898,271 businesses were approved for CEBA loans totalling more than $49 billion, according to the federal government.

What CEBA loan holders need to know

CFIB also said that it “has been flooded with calls from panicked small business owners who are struggling to repay their loans and getting inconsistent answers and little help from government and banks”.

To help out employers, CFIB listed some things that loan holders need to know:

• If you are looking to borrow to repay your CEBA loan and keep the forgivable portion, you need to apply for a refinancing loan with the bank that issued your original CEBA loan before Jan. 18, 2024, to qualify for a special extension to March 28, 2024. As bank staff often do not understand these rules, CFIB recommends small business owners ensure they document any requests or applications for refinancing.
• If you are rejected for refinancing from your CEBA bank, you will still qualify for the extension to March 28, 2024, as long as your account is in good standing. This provides some extra time to look for alternative financing.
• If you remain eligible but cannot repay or borrow to repay your loan, you will lose the forgivable portion, but you will have three years until the end of 2026 to repay the balance at 5% interest.
• For approximately 50,000 small businesses that have been deemed ineligible for the loan they received and spent, they have already passed their deadline of Dec. 31, 2023 and have lost access to the forgivable portion. Collection efforts will begin in the spring of 2024. “After extensive pressure from CFIB, the government announced it will provide new flexibility for these cases, including up to a two-year repayment period with no penalties and 5% interest,” noted the group.

Before 2022 ended, CFIB also called on the federal government to hit the pause button on the 2023 increase in payroll taxes.