Canada’s premiers during the closing news conference at the Council of the Federation Canadian premiers meeting at The Fort Garry Hotel in Winnipeg on July 12.JOHN WOODS/The Canadian Press
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.
“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.
The letter said the CEBA repayment deadline to qualify for the $20,000 forgivable portion of the loan is causing stress for business operators at a time when they are facing other pressing economic issues.
“The same loan that was once a lifeline during the pandemic is now threatening to sink the small businesses that are only just getting by,” it said.
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.”
Federal Small Business Minister Rechie Valdez told business leaders at a public meeting Thursday in Toronto that she is aware that some businesses were hit harder than others during the pandemic.
“I have been travelling across Canada and meeting with many small businesses and I know that there are sectors that are hardest hit,” she said. “We’re looking at different things to help small businesses.”
Rechie said the government has introduced flexible repayment options to the CEBA loan program, including a three-year extension until 2026.
“We’ve given you more time,” she said.
Kelly said businesses are no longer eligible for the $20,000 forgivable portion of the loan if they opt for the three year extension, which also includes interest payments of five per cent.
The federal New Democrats said in a statement they support the premiers’ call for relief for small businesses.
“The Liberals have no problem giving favours and handouts to ultra-rich CEOs while leaving small businesses and their workers behind,” said NDP small business critic Richard Cannings.
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.