Extending CEBA forgiveness deadline another year would cost Ottawa $907M: PBO

Pushing back the deadline for businesses to repay their government-backed pandemic loans in order to access the forgivable portion would cost Ottawa $907 million, according to an estimate by the parliamentary budget officer (PBO).

The Canada 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.

A business could apply for up to $60,000 through the program. Up to $20,000 would be forgiven if the rest was repaid by a certain date.

The government recently granted a small extension to the deadline, moving it from December 31 of this year to Jan. 18, 2024.

Many businesses have called for the deadline to be delayed to the end of next year. Canada's premiers added their voices to that call last month.

After Jan. 18, CEBA loans convert to a three-year term loan at five per cent interest. The PBO suggests that the $907 million cost of moving that deadline to the end of 2024 would come in the form of delayed repayments and forgone interest payments.

The estimate was based on a Statistics Canada survey of CEBA loan holders' repayment intentions.

Dan Kelly, president of the Canadian Federation of Independent Business, said he welcomed the PBO report but argued that it assumes businesses won't repay ahead of the current Jan. 18 deadline.

The CFIB has said that few small businesses are back to pre-pandemic sales and they're also being hit with new cost pressures from inflation and higher interest rates.

Kelly said not extending the deadline would put some 250,000 small businesses in jeopardy. He argued the PBO report doesn't take into account the cost of those businesses going under.

Dan Kelly, President of the CFIB, said the PBO report doesn't take into account the costs of not extending the deadline. (Sue Goodspeed/CBC)

"If even some of these businesses do fail, they will most likely default on the entire CEBA loan, leaving Ottawa on the hook for the entire ... balance," he said in an emailed statement.

"We believe there are many viable businesses that will survive if Ottawa is more patient and allows them more time to recover. Government is likely to get more of the money back if it extends the repayment deadline and give businesses more time to repay."

Nearly 900,000 businesses were approved for the program, which distributed just over $49 billion in loans.

When asked, a spokesperson for Small Business Minister Rechie Valdez didn't say if the estimated cost was a deterrent to extending the deadline.

"The flexibilities that we announced in September to the CEBA forgiveness and term loan repayment deadlines ensure that we continue to support small businesses that need help in a fiscally responsible manner," Nadine Ramadan, Valdez's communications director, said in an email

The PBO previously estimated that pushing the deadline back to Jan. 18 would cost the government $52 million.