Question Period Note: CANADA EMERGENCY BUSINESS ACCOUNT

What is the Canada Emergency Business Account (CEBA) support and what is its current status?

• During the pandemic, the Canada Emergency Business Account (CEBA) provided much-needed interest-free loans of up to $60,000 to nearly 900,000 Canadian small and medium-sized enterprises (SMEs).
• CEBA loan holders who paid the balance by the repayment deadline of January 18, 2024, are able to have up to $20,000 of their loan forgiven.
• Loan holders could also apply for refinancing of the loan by January 18. If they applied for refinancing, they now have until March 28 to finalize that agreement, giving them more time to work with their financial institutions.

As part of the government’s COVID-19 Economic Response Plan, the Canada Emergency Business Account (CEBA) was launched in 2020 to provide small and medium-sized enterprises (SMEs) and not-for-profits with partially-forgivable interest-free loans to help them finance their non-deferrable expenses while dealing with lockdowns and capacity restrictions. The requirements for eligibility, which were initially based on businesses with payroll expenses within a particular range, was expanded several times, including through the creation of a second stream based on non-deferrable expenses. The original loans were up to $40,000, with 25% forgivable if the remaining principal was repaid. Eligible businesses were later able to apply for an additional $20,000, 50% of which was similarly forgivable. These loans were provided through a partnership between Export Development Canada and private sector financial institutions (FIs).
Research by Innovation, Science and Economic Development Canada found that CEBA recipients tended to be young; 40.8% were less than ten years old, and were mainly micro-sized businesses with 53.2% having between 1 and 4 employees. The accommodation and food services sector had the highest CEBA application rate (81.6%), followed by the tourism sector (77.6%). The tourism group includes businesses that operate in transportation, recreation, and entertainment industries.
In response to concerns raised by SMEs and FIs relating to the timely processing of repayments, the original deadline for forgiveness of December 31, 2023, was extended to January 18, 2024, for eligible CEBA loan holders. CEBA loan holders that submitted an application to refinance their CEBA loan to the same FI that issued it to them by January 18, 2024, could qualify for partial forgiveness upon payment of the outstanding principal plus any applicable interest by March 28, 2024. Additionally, the CEBA term loan repayment deadline for businesses unable to meet the partial loan forgiveness deadline was extended by one year to December 31, 2026.

• On September 14, 2023, the Prime Minister announced extended deadlines for Canada Emergency Business Account (CEBA) loan repayments, providing an additional year for term loan repayment, and additional flexibilities for partial loan forgiveness of up to 33 per cent.
• This builds on the government’s previous extension of the repayment and loan forgiveness deadline from December 31, 2022, to December 31, 2023.