'Lipstick on a pig': Businesses say Ottawa's CEBA repayment extension misses crucial point

financialpost.com:

Tina Hamlin, who runs a home decor company in Vancouver, was initially elated when she heard the federal government will allow small businesses an extra year to repay a loan given to them during the pandemic.

Amid a series of other announcements on the housing crisis and rising food prices, Prime Minister Justin Trudeau on Sept. 14 said the extension on Canada Emergency Business Account (CEBA) loans will provide small businesses with a “bit more runway” to pay them back as dozens of his party’s members applauded the announcement on air.

Thrilled with what she saw on the news, Hamlin decided to go online and dig a little deeper. A few minutes later, her excitement fizzled as she realized the extension ignored a key aspect of the loan: the forgiveness grant.

CEBA offered interest-free loans of up to $60,000 to small businesses and not-for-profits until June 2021 to help them tackle the economic impacts of the pandemic. In total, $49.2-billion worth of loans to around 900,000 businesses were made under the program.

Repaying this loan by Dec. 31, 2023, would have allowed businesses to receive a loan forgiveness grant of up to $20,000. If companies fail to meet the deadline, however, they will be charged interest of five per cent per year and the full principal would be due Dec. 31, 2025.

Several business groups urged Ottawa to extend the repayment deadline along with access to the forgiveness grant by at least a year because thousands of small businesses warned they have yet to recover financially and are staring at bankruptcy.

The government responded this week by extending the overall loan repayment deadline by a year to Dec. 31, 2026. But the deadline to meet the condition for the forgiveness grant of up to $20,000 was