(Montreal) Nearly 50,000 Canadian small businesses have received a notice informing them that they will not be eligible for the forgivable component of a loan granted under the Emergency Business Account (CEBA).
Posted at 1:37 p.m.
This represents nearly 6% of the 900,000 loans guaranteed by the federal government under the CEBA, confirms Export Development Canada in an email.
The CEBA is a federal interest-free loan program for small businesses that have experienced difficulties during the pandemic. It allows you to borrow up to $60,000. Eligible borrowers can obtain a loan forgiveness equivalent to one third of the loan, which represents a maximum of $20,000, if they repay the entire loan before the end of the year 2023.
The fact that 50,000 businesses are ineligible for the forgivable component of the CEBA is of concern to the Canadian Federation of Independent Business (CFIB). “There are companies that applied in good faith and these companies received the loan in good faith,” said Jasmin Guénette, vice-president of national affairs for the CFIB. Suddenly, we find ourselves in a situation where these businesses are deemed ineligible, following a process that is not the most transparent. »
Mr. Guénette finds it hard to understand how so many businesses have found themselves ineligible for loan forgiveness. “We ask ourselves: ‘What are the criteria that will ensure that the government will deem the company inadmissible?’ »
He points out that the CEBA criteria were broadened along the way and that this may have led to confusion on the part of SME owners as to the eligibility criteria and the documents required.
It was not possible to obtain an immediate explanation from Export Development Canada as to the main reasons why contractors were found to be ineligible.
It should be noted that the approximately 50,000 companies targeted are still benefiting from the interest-free loan from the CEBA until the end of December 2023. However, they must repay all of it rather than two-thirds.
CFIB is calling on the Trudeau government to be more flexible in applying eligibility criteria. “Apart from the cases of fraud which are indisputable, we are asking the government to authorize the SMEs which have benefited from the loan to keep the subsidy portion or at the very least to set up an arbitration process so that the companies can explain why they considered their application eligible. »
The notices of ineligibility come at a time when many small businesses are still living with the impact of the pandemic. Mr. Guénette points out that half of Canadian SMEs would not have returned to their pre-pandemic income threshold and that two-thirds would have incurred debt due to the pandemic, according to a survey of its members. “For a number of SMEs, it will be a difficult blow to take. »