Advocates say more than 8,000 small businesses in Saskatchewan are at risk of closing their doors by the end of the year if the federal government doesn’t change the repayment date for the Canada Emergency Business Account (CEBA) loans.
The Canadian Federation of Independent Businesses (CFIB) said that if the deadline isn’t extended, small businesses will lose the forgivable portion on Dec. 31, 2023, which will add up to $20,000 more to their debt and cause them to face five per cent interest on the full balance.
“With only half of small businesses returning to normal sales, most businesses — particularly in the arts, recreation, hospitality and the service sectors — will need extra runway,” said Dan Kelly, CFIB president.
Kelly said financial institutions still have time to delay repayment processes if the government extends the CEBA deadline, but the window of opportunity is closing.
“Ottawa needs to act now,” he said.
The federal CEBA program offered interest-free loans of up to $60,000 to small businesses and not-for-profits during the COVID-19 pandemic.
According to the Government of Canada website, more than 29,000 businesses in Saskatchewan received CEBA loans. Only 12 per cent have repaid them.
Data from CFIB shows that a total of 44 per cent of Saskatchewan CEBA users risk missing the current repayment deadline by the end of 2023.
The other 44 per cent of Saskatchewan small business owners indicated they would meet the 2023 deadline, but more than half of them said it would be a struggle and would like to see an extension of the repayment deadline.
“Most business owners want to repay the loan on time in order to secure the forgivable portion, but many of them still can’t guarantee they can do it,” said Simon Gaudreault, chief economist and vice-president of research at CFIB.
If businesses don’t meet the Dec. 31 deadline, they will have to pay back the forgivable amount of $20,000 plus interest.
Wes Moore, owner of Moore Architecture Consulting Group Ltd. in Prince Albert, Sask., said that if his business isn’t able to come up with the money, it could be detrimental to its future.
“If we had to bear the burden of repaying all $60,000 plus interest, that would be very devastating to our business,” said Moore.
“We’re having to live and then squeeze by and hopefully do everything we can to meet our obligations to keep the lights and the heat on and still try to ultimately pay back the CEBA loan.”
CFIB is asking the federal government to extend the repayment deadline for the CEBA loan to the end of December 2025 or at least 2024, to consider additional debt forgiveness, and implement an appeal process for CEBA loan recipients that are now deemed ineligible.
“The CEBA loan, which once served as a pivotal economic lifeline during the nearly two years of COVID restrictions, is now a source of immense stress and anxiety for small businesses,” said Corinne Pohlmann, Senior Vice-President of National Affairs at CFIB. “Ottawa must give them more time, or we will see more ‘permanently closed’ signs in the coming months.”
Ministry of Finance press secretary Adrienne Vaupshas said in a statement that last year the repayment deadline was already extended by a year.
“Last year, for eligible loan holders in good standing, we announced that the repayment deadline to qualify for partial loan forgiveness was extended by one year, to Dec. 31, 2023,” said Vaupshas. “This was intended to support hard-working business owners as they continue to recover from the pandemic.”
Vaupshas said that the federal government has secured commitments from Visa and MasterCard to lower credit card transaction fees for small businesses while also protecting reward points for Canadian consumers.
Vaupshas did not say whether the ministry is considering extending the deadline again.
Some 885,527 small businesses across the country received CEBA loans, for a total of $48.4 billion.
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