Only a fraction of CEBA loans have been repaid as businesses call for deadline extension

Small businesses are asking for a deadline extension on the federal government's pandemic loan program — and only a fraction of them have repaid the money they owe.

The Canadian Emergency Business Account (CEBA) was introduced at the height of the pandemic to help out small businesses forced to close or limit their operations due to public health measures. The program offered interest-free loans backed by the federal government.

Nearly 900,000 businesses were approved for the program, which distributed just under $50 billion in loans. 

But the most recent data from Export Development Canada (EDC), the Crown corporation responsible for administering CEBA, indicate only a fraction of the money has been paid back. As of the end of November, only $5.7 billion had been repaid and just 13 per cent of businesses had repaid the loan in full.

Bri Corbett — who owns Fun & Games, an arcade and play centre in Kamloops, B.C. — said she hasn't been able to make payments on her CEBA loan because her business has only just returned to pre-pandemic levels.

"I don't want to jinx myself or anything, so knock on wood. But it's been in the past month or so that we're kind of starting to see that light at the end of the tunnel, where it feels more stable," she said.

Through CEBA, financial institutions offered loans of up to $60,000 backed by the federal government. A portion of each loan is forgivable. But any business that hasn't paid back the unforgivable portion of its loan by the end of 2023 is required to repay the entire loan, which starts accruing interest.

Corbett said she doesn't expect she'll be able to repay the loan by then. She said she has other expenses that require more immediate attention.

"We basically are playing triage still with what's the most important things that we need to take care of. And anything to do with rent and payroll, that's all number one," she said.

EDC said that the low level of repayment on CEBA loans doesn't mean that most businesses are struggling, and it expects more businesses to make payments as the deadline inches closer.

Businesses still below pre-pandemic sales

But Dan Kelly, president of the Canadian Federation of Independent Business (CFIB), said only half of Canada's small businesses are back to pre-pandemic sales levels.

"Many businesses are looking at their CEBA loan wondering how on Earth they're going to repay it," Kelly said, noting that rising inflation and interest rates have added to the pressure on small businesses.

"These are really trying times and unfortunately, most are predicting that it's going to get worse before it gets better. There are people's livelihoods on the line here."

Corbett agreed. "Everything almost still feels on the knife edge," she said.

The federal government originally set the end of 2022 as the deadline to repay the unforgivable and interest-free portion of CEBA loans. It extended the deadline to 2023 as the Omicron wave began to pick up.

Kelly said that deadline extension was helpful and gratefully received by small businesses. CFIB is now asking for another one-year extension.

"These are independent businesses that have tried as best they can to survive the pandemic," he said. "It would be a real shame for these businesses to fail as we go through the recovery period."

When asked to respond to CFIB's request for another deadline extension, Minister of Small Business Mary Ng's office pointed to the extension granted last year.

"We know that some small businesses continue to struggle, which is why we recently gave them an additional year to repay their loans," a statement from Ng's office said.

NDP finance critic Daniel Blaikie said the government should grant the second extension, adding small businesses "need more time to get back on their feet."

"Calling in this debt just as things are getting closer to normal will not give Canada's small businesses the runway they need to re-establish themselves. It is a recipe for ensuring a substantial portion of that debt is never repaid," Blaikie said in a media statement.

Corbett said that while she understands the money needs to be repaid, an extension would offer her "more breathing room."

"It's on my mind every single time I check my bank account," she said. "It's just like giant flashing red light that is just like, 'Don't forget this is coming up.'"