Feds extend CEBA repayment deadline

The federal government has announced an extension to the deadline for repayment of the Canada Emergency Business Account (CEBA), but stakeholders are clamouring for a bigger move from Ottawa.

Ottawa has moved the deadline for the repayment for partial loan forgiveness of up to 33 per cent under the program to Jan. 18, 2024, “recognizing that the end of December is a busy time for many Canadian businesses”.

The deadline was previously set at Dec. 31, 2023.

Numerous stakeholders – including the Canadian Chamber of Commerce and the Canadian Federation of Independent Business (CFIB) – have called on the federal government to move the said deadline. Even federal parties made the same call.

Deadline of March 28, 2024 for CEBA repayments

Also, for CEBA loan holders who make a refinancing application with the financial institution that provided their CEBA loan by Jan. 18, 2024, the repayment deadline to qualify for partial loan forgiveness now includes a refinancing extension until March 28, 2024, according to the government.

“This will allow more small businesses and not-for-profits to access relief and give them more time to hear back from their financial institutions on refinancing applications,” Department of Finance Canada says.

Starting Jan. 19, 2024, outstanding loans – including those that are captured by the refinancing extension – will convert to three-year term loans, subject to interest of five per cent per annum. The term loan repayment date will move from Dec. 31, 2025 to Dec. 31, 2026.

“Put simply, small businesses and not-for-profits will automatically have access to a three-year, low-interest loan of up to $60,000 if they have not repaid or refinanced their loan,” says the finance department. “This will provide those who are unable to secure refinancing or generate enough cashflow to repay their loans by the forgiveness deadline an additional year to continue repayment at a low borrowing cost.”

Meanwhile, those who will make repayments on or before the new deadline will get loan forgiveness of $10,000 for a $40,000 loan and $20,000 for a $60,000 loan.

Financial institutions will contact CEBA loan holders directly regarding their loans.

Plan ‘misses most central issue’

Perrin Beatty, president and CEO of the Canadian Chamber of Commerce, says the extension of the repayment deadline means that the federal government “has heard the business community and is responding to some of the challenges of the current economic environment”.

“It would be tragic to see businesses that survived the pandemic having to close now. That is why the Canadian Chamber joined our network of local chambers of commerce and boards of trade, along with other business associations and thousands of individual businesses across Canada, in calling for an extension to the CEBA repayment deadline,” shye says.

“The Chamber will continue to closely monitor the implementation of today’s announcement, which we hope will provide some of the stability and certainty businesses need to get back on their feet, continue strengthening their communities, and put Canada on a path to prosperity.”

However, the CFIB “is disappointed” with the announcement.

“The government has failed to address the most critical issue on outstanding CEBA loans - the loss of the $20,000 forgivable portion for those unable to repay the loans by year end,” says Dan Kelly, president and CEO, CFIB. “The extension of the forgivable deadline by a few weeks will be of very little value to the thousands of small business owners who just don't have money to repay now.”

Earlier CFIB data found that losing the forgivable portion puts at jeopardy the future of up to 250,000 small businesses.

The Tourism Industry Association of Canada expressed the same sentiment.

"We must emphasize that a mere three-month loan forgiveness extension for businesses needing to refinance does not align with the severity of the crisis," says Beth Potter, president of the association, according to a CBC report. "This falls short of adequately addressing the immense financial strain and uncertainty that our members are experiencing."

Ottawa previously expanded the CEBA to cover more Canadians and businesses facing difficult challenges as a result of the global COVID-19 outbreak.

The CEBA loans were provided to almost 900,000 organizations, representing $49 billion.