Up to 250,000 small businesses across Canada face uncertain futures if the federal government continues with its repayment options for a COVID-19 loan program, says Dan Kelly, president of Canadian Federation of Independent Business.
Kelly applauded a joint letter sent Friday to Prime Minister Justin Trudeau from Canada's premiers asking the federal government to extend the repayment period for a year for interest-free loans given to small businesses and non-profits during the pandemic.
He said extending the loan repayment time period by a year would give more businesses the opportunity to qualify for a $20,000 forgivable payment on a loan of up to $60,000, he said.
"The premiers are listening," Kelly said in an interview. "I sure wish the federal government was listening. Our estimate is if small business owners lose the forgivable portion, we believe up to a quarter million businesses — their future is at risk."
The federal government's Canada Emergency Business Account offered interest-free loans to small businesses during the COVID-19 pandemic, which included a $20,000 forgivable portion if the loan was repaid within a set time period, which has now been extended to Jan. 18, 2024.
Kelly said most small businesses borrowed the money through the CEBA program during the pandemic, but extending the repayment period to increase the opportunity for businesses to receive the forgivable benefit will "help thousands and thousands of small businesses make it across the recovery zone from the COVID-19 damage they took on."
The letter signed by all the premiers said that small businesses, like most other Canadians, are feeling squeezed by the rising cost of housing, groceries and other daily essentials, and just when they are starting to recover after the pandemic they are facing higher inflation and interest rates."
"That’s why I’m joining other premiers in asking the federal government to give small businesses a chance to recover with more time to qualify for loan forgiveness and by extending CEBA loan repayments for another year," B.C. Premier David Eby said in a statement sent out with the letter to media.
A spokeswoman for federal Finance Minister Chrystia Freeland said in a statement that the federal government has implemented several repayment options, including an extension last month on the Dec. 31, 2023 eligibility period.
"The bottom line is that, if you are a small business and do not currently have the funds to repay your CEBA loan, you now have three years to repay it in full," said press secretary Katherine Cuplinskas.
"The CEBA program, which delivered over $49 billion to nearly 900,000 small businesses and non-profits across the country, was an essential part of the federal government’s swift response to the COVID-19 pandemic," she said. "The additional flexibility that we announced is significant support for small businesses who might still be struggling to make ends meet."
The premiers' letter follows the recent request by Eby and premiers Doug Ford of Ontario and Andrew Furey of Newfoundland and Labrador, that the Bank of Canada consider the human impact of further rate increases, and the potential for additional increases to drive up housing costs.
"Whether it’s homeowners and renters, or small businesses struggling to recover, we need to support people in these difficult times," Eby said in the statement. "I would like to thank the other premiers in joining this very important request of the federal government and I am confident that Prime Minister Trudeau will respond positively to support small businesses."
The federal government's website says Ottawa approved CEBA loans of $40,000 and $60,000 for 898,271 businesses and the number of businesses approved for expansion loans of $20,000 was 571,851.
This report by The Canadian Press was first published Oct. 20, 2023.
Dirk Meissner, The Canadian Press
