CFIB calling on Ottawa to implement 3-year CEBA repayment plan
Over 200,000 – that’s the number of small businesses forced to take on new debt to refinance their Canadian Emergency Business Account (CEBA) loans in order to retain access to the forgivable portion, according to the Canadian Federation of Independent Business (CFIB).
Overall, 23% of SMBs were forced to take that route, according to CFIB’s survey of 4,092 members conducted Feb. 8-21, 2024.
And 6% – equivalent to about 50,000 – small firms are still pursuing a special extension to March 28 for those in the process of refinancing.
"Many of those businesses that had to borrow to repay their CEBA loans are facing high interest rates and will be challenged to meet their payment obligations," said Dan Kelly, CFIB president.
"We need to remember while government got a lot of CEBA balances repaid, the debt for many businesses didn't suddenly go away – it just shifted from a low interest government-backed loan to a higher interest bank loan. This should sound the alarm for policymakers, particularly given the business insolvencies are surging."
CEBA deadline in January
The deadline for repayment of the loans issued as part of the CEBA was due on Jan. 18, 2024. Kelly previously noted that about 900,000 small businesses were holding CEBA loans and 22% of them were not in a position to repay at that time.
Across the country, 898,271 businesses were approved for CEBA loans totalling more than $49 billion, according to the federal government.
The financial situation of their business is the primary concern for one in five (20%) small business owners, CFIB noted, citing data from the federal government.
“Business insolvencies are soaring, having jumped by 129.3% in January 2024 compared to January 2023, while latest data available shows more businesses were closing than opening in December 2023,” the group said.
3-year CEBA repayment plan
As the federal government is winding down the CEBA program, CFIB is calling on officials to:
- Implement a review process for CEBA loan holders deemed ineligible and introduce a three-year repayment plan.
- Ensure the maximum flexibility is used for those who have attempted to take out a refinancing loan to use the special extension to March 28. CFIB urges banks to accept any form of communication requesting refinancing as sufficient proof for the extension.
- Look at new ways to lighten the debt load for those who were unable to meet the January 18 deadline.
"Small business owners face massive debt loads and cost increases, and many feel abandoned by the government and the way it handled the repayment of the CEBA program,” said Corinne Pohlmann, executive vice-president of Advocacy at CFIB.
“Ottawa should do more to help them deal with the high cost of doing business and provide concrete financial relief measures in the upcoming federal budget, such as lowering the Employment Insurance premiums for small employers and returning the $2.5 billion in carbon tax revenue owed to small businesses.”
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.”
CFIB also noted that its advocacy and push for an extension has garnered support from all 13 Canadian premiers and three federal parties: The New Democratic Party, Bloc Quebecois and the Green Party. They also got over 57,000 signatures on CFIB's petition.
