The Red Deer Chamber of Commerce is urging the government to extend the payback period for small business loans used to ease financial woes during the time of COVID.
According to the Canadian Federation of Independent Businesses, 20 per cent of Alberta businesses are at risk of closure as the Dec. 31 replayment deadline approaches for the Canada Emergency Business Account (CEBA). CFIB urges government to give them more time to pay back the loan.
Red Deer Chamber CEO Scott Robinson isn’t sure exactly how many local businesses are having trouble making repayments, but he knows quite a few Red Deer entrepreneurs did receive this federal assistance to help them make ends meet during pandemic lockdowns.
Robinson said the Alberta Chamber of Commerce is asking for a two-year extension of the loan replayment deadline, pushing it ahead to Dec. 31, 2025. “We would like businesses to be given the opportunity to pay back only the principal by that deadline… that is the policy position we are advocating for.”
The Alberta Chamber is also urging the Alberta government to offer businesses struggling with repayment some bridge financing, if needed, as a way of showing extra support.
Last week, the CFIB sent out a release stating that over 34,000 small businesses — or 20 per cent of all small businesses in Alberta — could be at risk of closing their doors unless the federal government changes the deadline to repay the Canada Emergency Business Account (CEBA) loan.
Small businesses that don’t meet the loan repayment deadline will lose the forgivable portion of the emergency loan/grant as of Dec. 31. The CFIB stats this would add up to $20,000 more to their debt and cause them to face five per cent interest on the full balance.
“With only half of small businesses back to normal sales, most businesses — particularly in the arts, recreation, hospitality and the service sectors — will need extra runway,” said Dan Kelly, CFIB president. “Financial institutions still have time to delay repayment processes if the government extends the CEBA deadline, but that window is closing. Ottawa needs to act now.”
A new report released by CFIB also shows of the nine in ten Alberta small businesses who used CEBA, nearly three quarters accessed loans between $40,001 and $60,000, while nearly one in five received loans of up to $40,000.
Only eight per cent of CEBA users in the province have so far repaid their loans. and a total of 47 per cent of Alberta CEBA users risk missing the current repayment deadline by end of 2023.