For the second time, the Trudeau government has extended the deadline for repayment on $49.2 billion worth of interest-free pandemic loans for small businesses, announced on Thursday..The loans, which were initially expected to be repaid by December 31, 2022, now have an extended repayment deadline of December 31, 2024..“While many have paid these loans back we know some need a bit more runway so we are extending the loan repayment deadline,” said Prime Minister Justin Trudeau. .According to Blacklock’s Reporter, the Canadian Federation of Independent Business estimated that only around 18% of its members who had taken loans had managed to repay them..Parliament in 2020 introduced the Canada Emergency Business Account program offering small businesses up to $40,000 interest-free loans with a quarter forgiven on repayment. .Loan terms were later expanded by cabinet to $60,000 with a third forgiven on repayment due December 31, 2023..“The government has failed to address the most critical issue on outstanding loans, the loss of the $20,000 forgivable portion,” the Federation said in a statement..“The extension of the forgivable deadline by a few weeks will be of very little value to the thousands of small business owners who just don’t have money to repay now.” .The Federation estimated 69% of its members who applied for loans were unable to repay what they borrowed..Businesses that applied for loans were typically small and indebted, according to a Department of Industry report. .“In general, loan recipients tended to be young businesses,” said the report SME Profile: Recipients of the Canada Emergency Business Account..Eighteen percent of the applicants reported they had resorted to borrowing from lines of credit, taking out second mortgages and increasing their credit card balances to keep their businesses going..The results were from a survey of 19,283 small business owners across the country..Finance Minister Chrystia Freeland previously stated the government was aware that borrowers faced risks and did not know the default rate on the loan program..“Small business owners are resilient and our government will continue to be there to help them,” said Freeland. .“Their survival is key.”
