(Victoria) Up to 250,000 small businesses across Canada will face an uncertain future if the federal government maintains its repayment options for a COVID-19 loan program, said Dan Kelly, president of the Canadian Federation of the independent business.
Mr. Kelly applauded a joint letter sent Friday to Prime Minister Justin Trudeau by the premiers of the provinces and territories asking the federal government to extend by one year the repayment period for interest-free loans granted to small businesses and non-profit organizations lucrative during the pandemic.
He said extending the loan repayment period by one year would give more businesses the opportunity to qualify for a partial forgiveness of $20,000 on a loan of up to $60,000.
“The prime ministers are listening,” Mr. Kelly said in an interview. I would like the federal government to listen. We estimate that if small business owners lose the refundable portion, the future of up to a quarter of a million businesses would be at risk. »
The federal government’s Canada Emergency Business Account (CEBA) offered interest-free loans to small businesses during the COVID-19 pandemic, which included a partial write-off of $20,000 if the loan was repaid within a specified time frame , which has now been extended until January 18, 2024.
Mr. Kelly noted that most small businesses have borrowed money through the CEBA program during the pandemic, but that extending the repayment period to increase the opportunity for businesses to take advantage of the partial write-off “would help thousands and thousands of small businesses to cross the recovery zone from the damage suffered during COVID-19.
The letter signed by all prime ministers argues that small businesses, like most other Canadians, are feeling crushed by the rising cost of housing, groceries and other necessities, “and just at the moment where they begin to recover from the pandemic, they face higher inflation and interest rates.”
“That’s why I’m joining other premiers in calling on the federal government to give small businesses a chance to recover by giving them more time to qualify for loan forgiveness and extending it for another year the repayment of CEBA loans,” British Columbia Premier David Eby said in a statement sent with the letter to media.
PHOTO CHAD HIPOLITO, THE CANADIAN PRESS
British Columbia Premier David Eby
The letter says the CEBA repayment deadline to qualify for the $20,000 forgivable portion of the loan is causing stress for business operators at a time when they are facing other pressing economic issues.
“The same loan that was once a lifeline during the pandemic now threatens to sink small businesses that are just getting by,” it is claimed.
Ottawa defends its approach
A spokesperson for federal Finance Minister Chrystia Freeland said in a written statement that the federal government has implemented several repayment options, including an extension last month of the eligibility period to December 31, 2023. .
“The bottom line is, if you’re a small business and you don’t currently have the funds to repay your CEBA loan, you now have three years to repay it in full,” said Press Secretary Katherine Cuplinskas.
“The CEBA program, which has provided more than $49 billion to nearly 900,000 small businesses and non-profit organizations across the country, has been a critical part of the federal government’s rapid response to the COVID-19 pandemic, she said. The additional flexibility we have announced is important support for small businesses who may still be struggling to make ends meet. »
Federal Small Business Minister Rechie Valdez told business leaders at a town hall meeting Thursday in Toronto that she is aware that some businesses have been hit harder than others during the pandemic.
“I’ve traveled across Canada and met with many small businesses and I know there are sectors that are being hit the hardest,” she said. We’re looking at different things to help small businesses. »
Mme Rechie also highlighted that the government has introduced flexible repayment options for the CEBA loan program, including a three-year extension until 2026.
“We gave you more time,” she said.
Mr. Kelly reminded that businesses are no longer eligible for the $20,000 repayable portion of the loan if they opt for the three-year extension, which also includes payment of 5% interest.
The federal New Democrats said in a statement they supported the premiers’ call for relief for small businesses.
“The Liberals have no problem giving favors and handouts to ultra-rich CEOs while leaving small businesses and their workers behind,” said NDP small business critic Richard Cannings.
The premiers’ letter follows a recent call for the Bank of Canada by Mr. Eby and Premiers Doug Ford of Ontario and Andrew Furey of Newfoundland and Labrador to consider the impact human nature of further rate hikes and the possibility that additional increases will drive up housing costs.
“Whether it’s homeowners and renters, or small businesses struggling to recover, we need to support people during these difficult times,” Eby said in the release. I would like to thank the other Prime Ministers for joining this very important request to the federal government and I am confident that Prime Minister Trudeau will respond positively to support small businesses. »
The federal government’s website says Ottawa approved CEBA loans of $40,000 and $60,000 for 898,271 businesses and the number of businesses approved for expansion loans of $20,000 was 571,851.