Yukon MP Brendan Hanley has commended the extension of the Canada Emergency Business Account (CEBA) loans.
The extension was announced by Prime Minister Justin Trudeau on Sept. 14.
Hanley, who was attending the Liberal caucus retreat in London, Ont., said there have been lots of conversations from the tourism industry, chambers of commerce and businesses in the Yukon.
“It’s been going really hard for businesses, so I think this is good news and well received. It’s exactly what we are asking for,” he said. “I think that’s what businesses were looking for to give them some flexibility for payment.”
Hanley told the News that before the extension announcement, he had a discussion on it with Deputy Prime Minister and Finance Minister Chrystia Freeland.
“It was part of the advocacy I brought to the meeting from the Yukon because we know this has been an issue in the territory and around the country because businesses have really been struggling with inflation, rising costs and labour shortages,” he said. “It’s still really a hard time for businesses recovering from COVID.”
Per the announcement, the repayment deadline for CEBA loans to qualify for this partial loan forgiveness was extended from Dec. 31, 2023, to Jan. 18, 2024.
Hanley said the government recognized that December would be a hard time for businesses to pay back the loans.
READ MORE: Yukon Party echoes businesses asking for COVID-19-related loan extension
For businesses making a refinancing application with the financial institution that provided their CEBA loan by Jan. 18, 2024, the repayment deadline to benefit from the partial loan forgiveness extends until March 28, 2024.
The government said outstanding loans after the 2023 deadline would be converted to two-year term loans with a five per cent interest rate, starting on Jan. 1, 2024, with the loans due in full by Dec. 31, 2025.
With the latest extension, small businesses that are not in a position to pay back their loans in time to benefit from the partial loan forgiveness have until Dec. 31, 2026, to pay their loan back in full.
More than 20 per cent of businesses that received a CEBA loan had fully completed the repayment.
“It’s an opportunity to give businesses a break but also to maintain a fiscally responsible approach,” Hanley said. “I think it strikes a pretty good balance. There is an extension of forgivability and another year to pay back the loan itself.”
According to the Canadian Federation of Independent Business (CFIB), 69 per cent of small businesses that accessed the loan have not yet been able to repay any of it. Only 18 per cent have repaid their loan in full as of September.
The CEBA loan program was launched on April 9, 2020, by the federal government to support businesses that have been impacted by COVID-19. The deadline to apply under the CEBA program was June 30, 2021.
Eligible businesses received a $40,000 loan as part of the program. CEBA loan holders who had received the $40,000 loan, were also able to apply for an expansion, which offered an additional $20,000 of financing to businesses, bringing the total to $60,000.
For eligible CEBA loan holders in good standing, repaying the balance of the loan on or before the December deadline will result in loan forgiveness of up to 33 per cent, up to $20,000.
The Tourism Industry Association of the Yukon (TIAY), Tourism Industry Association of Canada (TIAC) and the Whitehorse Chamber of Commerce have been pushing for an extension for the loans, at least for two years, citing that businesses are still struggling and have not yet recovered from the impacts of the pandemic.
A recent survey commissioned by TIAC revealed that 49 per cent of small businesses in the country are still making below normal revenues, half of Canadian food service operators are currently operating at a loss or breaking even compared to 12 per cent pre-pandemic and 45 per cent of Canada’s tourism businesses are likely or somewhat likely to close within the next three years without government intervention into their mounting debt load.
“I think it is safe to assume that some are on track to paying it off on time, but others are struggling because of challenges that have been beyond their control,” Neil Hartling, TIAY chair, said. “It’s also the largest private sector employer in the Yukon. It takes years for strong tourism companies to develop, so the survival of each Yukon tourism operator from the COVID crisis is essential for the Yukon.”
Whitehorse Chamber of Commerce chair Allison Camenzuli said the chamber supports the extension adding that many businesses are still recovering from COVID and dealing with increasing costs. This extension will support that, she said.
During the period of the CEBA loan, close to 900,000 businesses were approved for the loans and more than 500,00 were approved for expansions. A total of $49.2 billion has been disbursed for the loans and expansions across the country.
Contact Patrick Egwu at patrick.egwu@yukon-news.com
