The Parliamentary Budget Officer (PBO) estimates that it would cost the government $907 million if it extended the deadline for repaying Canada Emergency Business Account loans by one year and extended the period of exemption from interest payments for this benefit which supported SMEs during the pandemic.
Created in April 2020, at the start of the COVID-19 pandemic, the Canada Emergency Business Account offered small and medium-sized businesses (SMEs) interest-free loans, with possible partial repayment waiver. The federal government aimed to help SMEs pay for expenses that could not be avoided or postponed while they attempted to cope with closures ordered by Public Health.
Businesses must now repay their loans by the January 18, 2024 deadline in order to take advantage of the partial forgiveness. After this deadline, outstanding loans will be converted into three-year loans at an annual interest rate of 5%.
NDP MP Don Davies tabled a motion in the Commons to give SMEs one more year to repay Emergency Account loans and extend the interest waiver period until that time. date of December 31, 2024.
In his motion, Mr Davies believes that “local businesses continue to struggle due to inflation, interest rates and staffing issues”.
In its evaluation note published Thursday, the PBO estimates that this extension would cost the federal treasury $907 million. He underlines in particular that with this one-year postponement, the government would delay the reduction of its debt for the part of the loans which would have been repaid and that it would waive interest, at a rate of 5% per year, for the part loans that would remain unpaid.
