A massive blow ahead for SMEs receiving federal emergency loans

According to the latest Statistics Canada statement on the status of loan repayment from the Canadian Emergency Business Account (CEBA), a little more than a third (34.4%) of beneficiary businesses are at risk of not being able to repay their ready by the deadline of December 31, 2026.

Of the 898,271 SMEs receiving these federal loans (from $40,000 to $60,000 per business) granted as part of Justin Trudeau’s vast financial aid program to counter COVID-19, there are currently 309,000 who find themselves in a precarious financial situation.

Loss of federal subsidy

Due to their situation, these hundreds of thousands of SMEs experiencing financial difficulties will most of them lose the generous subsidies (from $10,000 to $20,000) that the Trudeau government grants to SME owners able to repay said CEBA loans in their entirety. For loans of $40,000 repaid on time, the SME keeps $10,000 in its coffers and for those of $60,000, the “gift” increases to $20,000.

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Where is the logic?

So, if you are one of the SMEs whose financial health is good enough to repay the loans granted under the Canadian Emergency Business Account by January 18, Justin Trudeau’s government is giving you the gift of a grant of $10,000 to $20,000. Note that a repayment extension until March 28 is offered to SMEs capable of refinancing with the financial institution that granted them the CEBA loan.

But if you are among the group of SMEs financially incapable of repaying said CEBA loans shortly, we will hold you back further by making you lose the federal subsidies in question. Eh yes! the federal government will thus penalize businesses that do not, for the moment, have the means to repay their loans.

To be fair and logical to all SMEs benefiting from CEBA, it seems to me that the only essential condition would have been to pay the federal subsidy when the loans are repaid, and this, without putting a deadline as is the case. the case currently.

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The balance sheet of the emergency account

There are 898,271 Canadian SMEs that have obtained a loan through CEBA. More concretely, 571,851 businesses each received a loan of $60,000 and 326,420, a loan of $40,000.

In total, the Trudeau government has advanced a total of $49.2 billion through this program.

According to forecasts, 589,265 SME owners will repay their loans on time and thereby benefit from subsidies ranging from $10,000 to $20,000 per SME head.

These SMEs will thus share a huge federal gift of $9.6 billion.

As for SME owners unable to repay their loans before the imminent deadline, they will unfortunately be leaving approximately $5 billion in federal subsidies on the table.

What a massive blow!

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