Small businesses are struggling with a looming loan repayment deadline in January 2024.
Ryan Mallough, vice-president of legislative affairs for Ontario with the Canadian Federation of Independent Business (CFIB), said the issues have a regional and local impact.
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, Mallough told StratfordToday.
“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.”
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.
In September of this year, that deadline was again extended, this time to Jan. 18.
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 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 said 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.
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, if it's updated at all.
— StratfordToday
