Over 25% of businesses missed the deadline to repay their Canada Emergency Business Account loans, which were due last Thursday, according to estimates from the federal government.
The CEBA program was the most commonly used pandemic support program for businesses, which dished out loans of $40,000 or $60,000 to almost 900,000 companies during the lockdown years of 2020-2022.
More than $49-billion was ultimately given out to business across the country.
Businesses which did manage to repay their loans before the recent deadline were qualified for loan forgiveness of either $10,000 or $20,000, depending on the initial loan and were not charged any interest.
However, outstanding loans will accrue an annual interest rate of 5% and will be due in full by Dec. 31, 2026.
“Thank you to all the small businesses who did the right thing to keep Canadians safe and then continued to remain resilient and persevere through some very challenging times,” said Small Business Minister Rechie Valdez during a federal cabinet retreat in Montreal on Monday.
Valdez announced that about 75% of businesses who received CEBA loans did manage to repay, and were able to close out their accounts with the federal government on Thursday.
However, that figure doesn’t paint an entirely clear picture, as many of those businesses were forced to refinance their loans via an outside lender, meaning they still owe the money, just not to the federal government.
Reporters outside the Montreal retreat asked ministers what portion of that 75% had actually just refinanced their loans but were not given a substantive answer, with many ministers saying that they did not know the real figure.
“While the government got its money back, the debt burden to many small businesses didn’t suddenly go away – it just moved from the left pocket to the right one,” said president of the Canadian Federation of Independent Business Dan Kelly.
The CFIB represents 97,000 small and medium-sized businesses across the country.
Kelly said after his group surveyed its members, that at least one-third of those who repaid their CEBA loans were only able to do so by refinancing through other financial institutions.
He added that it’s concerning to see that 25% weren’t able to do it at all, especially considering that figure includes hundreds of thousands of Canadian businesses.
The restaurant industry was particularly affected by the pandemic, with over half of the industry now operating at a loss or just barely breaking even, according to an analysis recently published by global credit rating agency DBRS Morningstar, a global credit rating agency.
“The restaurant industry has had to endure significant hardships over the past few years. Acknowledging some geographic nuances, restaurant traffic generally only recovered toward pre-pandemic levels in 2022,” said the agency, which went on to say that the macroeconomic challenges have also compounded over that same timeframe.
“Consumers’ purchasing power was squeezed during (2023), leading to considerable changes in their behaviour as consumers tried to stretch their wallet. These changes naturally also extended to the restaurant industry.”