Small businesses are struggling with a looming loan repayment deadline in January 2024 and Ryan Mallough, VP of legislative affairs for Ontario with the Canadian Federation of Independent Business (CFIB) says the issues have a regional and local impact.
The Canada Emergency Business Account (CEBA), 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 then thought to be a lifesaver, Mallough said.
“We were big proponents of the program when it was first announced during the pandemic,” Mallough said of the CFIB. “Small businesses across the country were, at the time, not sure if they’d ever be opening again.”
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.
In September, that deadline was again extended, this time to Jan. 18, 2024.
Mallough said that throughout this calendar year, the CFIB has heard from its membership that more and more small businesses are concerned about whether they will be able to repay the loan.
In total, 87 per cent of their members, numbering more than 97,000, want a further extension.
Total membership is split in three ways. A third of businesses said they would 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 said that It is becoming increasingly evident that many businesses are closing down, and it is uncertain whether the CEBA loan repayment is the sole reason behind it. According to industry experts, this trend is a legitimate concern. If the deadline is not extended, realistically, about one in five businesses that received CEBA will have to shut down.
The CFIB is advocating for the deadline to be extended another year. The federal government’s fall economic statement is scheduled for Nov. 21. Mallough, CFIB, and other businesses and organizations will be looking to that date for any updates regarding the CEBA loan deadline, to see if it's updated.
Connor Luczka is a reporter for Village Media's StratfordToday.
