A staggering 200,000 small businesses (or 23%) were forced to take on new debt to refinance their Canadian Emergency Business Account (CEBA) loans in order to retain access to the forgivable portion, says the Canadian Federation of Independent Business (CFIB).
In a statement released Tuesday, the national organization said there are over 50,000 small firms (6%) that are still pursuing a special extension to March 28 for those in the process of refinancing. There are less than 48 hours remaining for eligible businesses to secure this refinancing in order to keep the forgivable portion of the loan.
Dan Kelly
“Many of those businesses that had to borrow to repay their CEBA loans are facing high interest rates and will be challenged to meet their payment obligations,” said Dan Kelly, CFIB president. “We need to remember while government got a lot of CEBA balances repaid, the debt for many businesses didn’t suddenly go away – it just shifted from a low interest government-backed loan to a higher interest bank loan. This should sound the alarm for policymakers, particularly given the business insolvencies are surging.”
The CFIB said the financial situation of their business is the primary concern for one in five (20%) small business owners. Business insolvencies are soaring, having jumped by 129.3% in January 2024 compared to January 2023, while latest data available shows more businesses were closing than opening in December 2023.
The CFIB is calling on Ottawa to:
- Implement a review process for CEBA loan holders deemed ineligible and introduce a three-year repayment plan.
- Ensure the maximum flexibility is used for those who have attempted to take out a refinancing loan to use the special extension to March 28. CFIB urges banks to accept any form of communication requesting refinancing as sufficient proof for the extension.
- Look at new ways to lighten the debt load for those who were unable to meet the January 18 deadline
Corinne Pohlmann
“Small business owners face massive debt loads and cost increases, and many feel abandoned by the government and the way it handled the repayment of the CEBA program. Ottawa should do more to help them deal with the high cost of doing business and provide concrete financial relief measures in the upcoming federal budget, such as lowering the Employment Insurance premiums for small employers and returning the $2.5 billion in carbon tax revenue owed to small businesses,” said Corinne Pohlmann, Executive Vice-President of Advocacy at CFIB.
CEBA loan holders can visit CFIB’s website for more information.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list. He was also named by RETHINK to its global list of Top Retail Experts 2024.
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