For some, it’s an average day. But for 23,000 Manitoba businesses, it’s a big one.
Thursday is the deadline for businesses to pay off their Canada Emergency Business Account (CEBA) loans.
Brianna Solberg, director of legislative affairs for Prairies and Northern Canada with the Canadian Federation of Independent Business (CFIB), said this is unfortunate timing.
“It’s more difficult now to be in business than it was at the height of the pandemic, just because of all those cost increases and other challenges,” she said. “So not to mention the federal government has piled on several other tax hikes. (Canada Pension Plan) and (Employment Insurance) premiums have increased, and the carbon tax will go up on April 1st as well.”
As of December 2023, only 40 per cent of CFIB members reported having paid back their loans, and “an alarming 17 per cent were quite certain that they wouldn’t meet this Jan. 18 deadline,” Solberg said, adding that 57,000 businesses signed a petition to the federal government asking for a deadline extension to the end of 2024.
The original deadline was set for Dec. 31, 2022. It was extended to Dec. 31, 2023 in September 2023.
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Many have been scrambling to get their payments in, because it means they can have up to one-third of their debt forgiven.
“Many have had to jump through hoops to secure that financing. That involves maybe going to the bank, taking out another loan at a higher interest rate,” Solberg said.
The alternative to paying off CEBA is business owners’ debt being converted to a three-year loan, with five per cent interest.
“(That) may seem low, but business owners have other loans that they are facing as well. The CEBA loan is not the only debt they have, and high interest rates are eating into their bottom line at a time when they can least afford it,” Solberg said.
Inflation is pinching everyone’s budgets, keeping people out of small businesses and continually raising costs, she said.
The outlook is somewhat discouraging.
“We’ve seen some close their doors already, just knowing they won’t be able to make a deadline,” Solberg said. “And for many over the next couple of years, as they try to pay this off, the accruing interest will be the straw that breaks the camel’s back, and we could see many more business closures.“
For those trying to get their payments in Thursday, she said to make sure you’ve at least tried to reach out to your bank to secure financing.
“If owners are able to prove that they’ve reached out to their bank to try and secure financing by today, then they will actually have a grace period until March 28, 2024, before they lose that forgivable portion and start accruing interest,” she said.
The government of Canada’s CEBA website said that “CEBA loan holders that submit a refinancing loan application to the financial institution that provided their CEBA loan by January 18, 2024 but require a grace period in order to finalize the payout of their CEBA loan can still qualify for partial loan forgiveness.”
The website also reminds that some people were stuck with a New Year’s Eve deadline to repay their debt.
“This deadline has now passed, Loan Holders with outstanding balances as of January 1, 2024, will be contacted by their financial institution to request a lump sum repayment of the outstanding debt,” it says.
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