By Megan Bocchinfuso –
Deadlines for repayment of federal CEBA loans to small businesses struggling with Covid-19 were extended on September 14 to multiple deadlines in 2024. Due dates for paying back Canadian Emergency Business Account loans depend on the businesses’ financial standing and the size of their loan.
The Canadian government began accepting CEBA applications from businesses in April 2020, and provided $49 billion to 900,000 small businesses in amounts of $40,000 up to $60,000 (some received $20,000 to bridge from $40,000 to $60,000.) The repayment deadline was initially December 31, 2023.
The new deadline to apply for refinancing is January 18 next year, and businesses have until March 28 to confirm new financing with their bank, therefore qualifying for partial loan forgiveness.
On January 19, all outstanding loans will be on a three-year term with an annual interest rate of five per cent. Loans of $40,000 repaid before January 18, or March 28 depending on the loan, will have $10,000 forgiven; and $60,000 loans will be forgiven $20,000. Additionally, the new loan repayment deadline will be December, 3, 2026.
Christina Santini, national affairs director for the Canadian Federation of Independent Business (CFIB), acknowledged that the deadline extension gives businesses “extra leg room,” enabling more people to make payments. Refinanced loans would save small businesses from predatory lenders that charge higher rates than established financial institutions.
But, she added, “We’re cautioning people to read the terms and conditions and make sure the (loan) agreement is what’s actually best for their business.”
Ward 13 City Councillor Chris Moise, who is also the small business advocate on the Economic and Development Committee, said City Council voted to ask the government to extend the deadline by a full year. A CFIB petition calling on the government to extend the CEBA repayment deadline to the end of 2024 garnered 40,000 signatures.
Moise said small businesses are still greatly affected from Covid-19, inflation and wage increases during this “economically slow” period. “If they were to pay this money back at this time, it would impact small businesses in the sense that they would have to close,” he said.
A city report called Support for Toronto’s Restaurants cited a Restaurants Canada survey showing that eight of 10 restaurants profited less in 2022 than in pre-pandemic 2019. Just over half (51 per cent) were not profiting or just breaking even, whereas unprofitable pre-pandemic restaurants amounted to only 12 per cent.
Ash Farrelly, owner-chef of the George Street Diner, told the bridge she has personal loans aside from CEBA that she needs to repay by the end of this year. With many pre-existing financial pressures from the pandemic, Farrelly said she feels disrespected by the Canadian government for many different reasons.
“If we can’t (afford) employees then what’s going to happen to restaurants? Farrelly said “They should be respecting us a lot more.”
Farrelly said the CEBA loans should have been grants rather than repayable loans. Farrelly’s loans barely covered the cost of wages, bills and inflated food prices, she said. Oil olive, for example, costs three times what it used to, Farrelly said.
“Small businesses had to take these debts on just to keep their lights on when they were asked (by the government) to close,” Santini said.
Small businesses are often not treated the same as larger businesses, considering their impact on the Canadian economy. “They often [create] more jobs than big corporations,” Farrelly said.
Moise stated the government often gives more grants to larger businesses, giving them an unfair advantage over smaller ones. He suggested that CEBA loans have no repayment dates, and be completely interest free.
A Statistics Canada survey reported that in 2021, small businesses made up 98.1 per cent of all employer businesses in Canada. Small businesses employed 10.3 million employees (63.8 per cent) of the work force, while large businesses employed 2.4 million (15 per cent).
“The government needs to … actively support small businesses, especially now during this pandemic,” Moise said. “They are the ones doing the heavy lifting in this country.”
Both Moise and Santini call on the public to actively support local businesses during Small Business Week in Canada, occurring from October 15 to 21. “When a small business fails, it has ripple effects in our community,” Moise said.
