The bell tolls for CEBA repayments

If your usually chipper barista seems a little on edge, it might be because today is a very stressful day for many small businesses across the country.

Driving the news: Today is the last day for businesses and nonprofits to repay their Canada Emergency Business Account (CEBA) loans — interest-free government loans — and still receive partial loan forgiveness, valued at up to a third of the loan, and avoid interest. 

Catch-up: During the pandemic, small businesses negatively affected by lockdowns were eligible to receive up to $60,000 through the CEBA program — which is to say, pretty much any business that wasn’t selling masks, disinfectants, or plexiglass dividers at the time.  

  • Nearly 900,000 businesses gladly took the government up on that offer but grew increasingly worried about the deadline, originally set for the end of 2022.

  • The deadline was pushed multiple times, but the buck stops today, which means businesses could see their debts converted into a three-year loan at 5% interest.

Big picture: Only 35% of businesses had repaid their loan as of mid-December, while 22% said they would not be able to meet today’s deadline. The remaining companies said they plan to repay by today; that said, there’s a good chance many took out other loans to do so. 

Why it matters: Your favourite mom-and-pop cafe or local watering hole could be at risk of going under without the CEBA debt forgiveness. Some 65% of small businesses are still holding pandemic debt — $107,702 of it on average — and can’t afford more on their plates.

Zoom out: Businesses at the biggest risk of missing the deadline include ones in the arts, social services, and hospitality sectors. Indeed, many restaurants face a tough road ahead, with 53% of eateries losing money or breaking even. It was only 12% pre-pandemic.—QH