The Prime Minister Justin Trudeau-led federal government has extended the repayment deadline for interest-free loans taken from the Canada Emergency Business Account (CEBA) program to next year.
This development was announced by Mary Ng, minister of international trade, export promotion, small business and economic development.
According to her, the deadline, which was Dec. 31 of this year, is now pushed to the same date in 2023.
In a news conference, she said “We’ve heard from businesses that they’re looking for this flexibility, and that’s what today’s announcement is about.
“This additional year will help businesses get that flexibility and continue to work together through this pandemic to the end of this pandemic.”
It is important to clarify that the CEBA progam offered interest-free loans of up to $60,000 to small businesses and not-for-profits during the COVID-19 pandemic. It was open from April 9, 2020, to June 30, 2021 and funded more than 898,000 Canadian businesses.
The government said going forward, repaying the balance of the loan on or before Dec. 31, 2023 would result in loan forgiveness of 33 per cent, or up to $20,000.
It was also clarified that outstanding loans would then convert to two-year term loans with interest of five per cent per year starting on Jan. 1, 2024, with loans fully due by Dec. 31, 2025.
As of the time of filing this report, the federal government has approved 898,254 CEBA loans and 569,282 CEBA expansions for businesses. Overall, the government has spent $49.17 billion on the program.
The minister also disclosed that the repayment deadline to qualify for partial forgiveness for CEBA-equivalent lending through the Regional Relief and Recovery Fund has been extended to Dec. 31, 2023 as well.
In a swift reaction to the development, President and CEO of the Canadian Federation of Independent Business (CFIB), Dan Kelly tweeted the announcement was “good news.”
In a Twitter thread, he wrote “#CEBA has been an incredibly helpful program & used by nearly 900,000 small business owners”
“Importantly, it is not just a $60K loan as the $20K forgivable portion is one of the few programs that helps reduce the COVID debt small firms have taken on.”
