Local businesses are struggling with a looming government loan repayment deadline in January and Ryan Mallough, VP of legislative affairs for Ontario with the Canadian Federation of Independent Business (CFIB), said the issue is widespread.
The CFIB is advocating for the deadline to be extended another year and is hoping next week's fall economic statement provides the hope businesses are looking for.
The Canada Emergency Business Account (CEBA) loan, an interest-free loan of up to $60,000, was offered during the COVID-19 pandemic to small businesses and not-for-profits to keep organizations afloat.
Authorized by the Federal government and provided by numerous financial institutions across the country, the loan was a life-saver for many, Mallough said.
“We were big proponents of the program when it was first announced during the pandemic,” Mallough said. “Small businesses across the country were, at the time, not sure if they’d ever be opening again.”
The Canadian Press reported last week that nearly 900,000 organizations applied for and received a Canada Emergency Business Account loan during the pandemic and a total of $49.2 billion was disbursed through the program.
Mallough said that over the course of 2023, they have heard from their membership that more and more small businesses are concerned about whether they will be able to repay the loan.
In September of this year, the deadline was again extended, this time to Jan. 18.
By paying off the loan by the deadline, 33 per cent, up to $20,000, would be forgiven. Originally, the deadline was Dec. 31, 2022, later extended by a year to 2023.
Those who fail to meet that deadline will lose the foregiveable portion of the loan and see it converted to a three-year loan repaid at five per cent annual interest.
In total, 87 per cent of their members, numbering more than 97,000, want a further extension.
Total membership is split about three ways. A third of businesses said they will be able to pay it back without much issue. Another third said that they will be able to pay it back, but they’re going to have to take out another loan to do it.
“And then the remaining third … that’s not even an option for them, they are in trouble if the deadline is not extended.”
Mallough also agrees that an increase in businesses shutting their doors, whether or not the CEBA loan is a factor, is a very real trend.
Realistically, he said, around one in five businesses will need to shut down if the deadline is not extended.
Greg Durocher, CEO of the Cambridge Chamber of Commerce agrees with that assessment and said since the banks have come calling, the government is eager to pay back the loans.
"I can tell you right now the banks went to the government and said, it'll be a headache trying to process this over the holiday season, just give us a few weeks into the new year," said Durocher. "Then Trudeau came out and said we're going to move the deadline from Dec. 31 to 2024; when in 2024 meant just over two weeks into the new year."
Durocher said without the extension many businesses are calling for, there will be countless small companies that go under.
"We're seeing it here in Cambridge, businesses aren't making what they were pre-pandemic and now they have to pay back these loans," he said. "The government needs to listen to us and other businesses, it would really be in their best interest."