The federal government’s extension for a small business loan repayment plan was touted as a win for businesses, but has instead drawn mixed reactions from industry experts with one saying it continues to leave owners on “pins and needles.”
Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland announced Sept. 14 a one-year-extension for the Canada Emergency Business Account, but it comes with a caveat: it’s only an 18-day extension if businesses want to keep the loan forgiveness.
CEBA loan holders have to make a refinancing application by Jan. 18, 2024 to qualify for a partial loan forgiveness of up to 33 per cent. The previous application deadline was Dec. 31, 2023 but the government recognized that “the end of December is a busy time for many Canadian businesses.”
For loan holders who make the Jan. 18 deadline, they’ll get a refinancing extension until March 28, 2024. From there, those loans will convert to a three-year term, subject to five-per-cent interest per year, with the term loan repayment date extended to Dec. 31, 2026 from Dec. 31, 2025.
Today we announced our plan to:
✅ Get more rental homes built by removing the GST on the construction of new apartment buildings
✅ Extend the Canada Emergency Business Account term loan repayment deadline &
✅ Ensure grocery chains come forward with a plan to stabilize prices.— Chrystia Freeland (@cafreeland) September 14, 2023
B.C. Restaurant and Food Services Association CEO Ian Tostenson told Black Press Media Thursday (Sept. 21) when the association first heard about the one-year extension, the reaction from members was incredible.
The interpretation, he said, was that everything had been pushed forward a year to allow for some breathing room for businesses.
“Then, about two hours later, the details came out from the department of finance saying that yeah, not really, you’ve got another year to pay it back but the timeframe to take advantage of the $10,000 or $20,000 or whatever the case is, it was really only extended by three weeks.”
The CEBA program was available April 9, 2020 to June 30, 2021, providing $49 billion in interest-free, partially forgivable loans of up to $60,000 to nearly 900,000 small businesses and not-for-profit organizations to help cover their operating costs during the pandemic.
Tostenson said there was massive disappointment when they realized it wasn’t extended in the way they were hoping.
“It’s disappointing because I don’t know if they really understand the nuances. I think they felt maybe that they were doing the right thing, but the practical effect is it’s not going to have any meaningful effect at all.”
The federal NDP’s small business critic Richard Cannings has called the 18-day extension a “cruel joke” in a media release Thursday.
“Unless the Liberals really want to see a quarter of a million small businesses go under, and countless local jobs lost, they must grant a real extension.”
Tostenson said if this is the federal government’s solution then it’s inadequate. He added businesses aren’t asking for free money, but instead more time.
“The industry is just on pins and needles on this one because you really need to have some certainty in business.”
He said many in the restaurant industry are struggling, especially after the wildfire season, and while the public has been supportive the loan is still “looming behind us.”
The B.C. Chamber of Commerce said in a statement the additional flexibility is “good news,” but more could have been done to address the needs of businesses that are at risk of losing the forgivable portion of their CEBA loan. But while the announcement provided a “modest extension,” the chamber is “concerned it will not deliver.”
