The first major repayment deadline for the Canada Emergency Business Account (CEBA) program looms large today (Jan. 18), marking the conclusion of nearly four years since the federal government issued $49 billion in emergency loans during the early stages of the COVID-19 pandemic.

With the loans recognized for assisting many small businesses in navigating public health restrictions and averting immediate bankruptcies, CEBA has had a significant economic impact.

“The program was essential and it saved a very large number of businesses,” Perrin Beatty, president of the Canadian Chamber of Commerce, told the Globe & Mail.

CEBA loans were always meant to be repaid, in contrast to other pandemic relief initiatives. The payback issue has persisted throughout the program, necessitating two deadline extensions. Businesses must repay their debts by Thursday (Jan. 18) to be eligible for partial forgiveness; the repayment amounts are $10,000 for loans totalling $40,000 and $20,000 for loans totalling $60,000. Companies engaged in ongoing discussions on refinancing have until March 28. The loans have an interest rate of five per cent each year after these dates, and the complete payback deadline is Dec. 31, 2026.

However, concerns persist, especially in industries severely impacted by the pandemic. Restaurants Canada warns that a third of eateries still operate at a loss and lack the funds to repay CEBA, urging further extensions to protect vulnerable businesses.

Furthermore, according to information gathered by the Canadian Federation of Independent Business (CFIB), seven out of 10 CEBA borrowers had yet to begin making loan repayments as of October of last year. In the meantime, one in five restaurants with a CEBA loan are about to close one or more locations, according to a Restaurants Canada poll. Additionally, according to the data, 53 per cent of food service operators are losing money or only making ends meet; this percentage was in the low teens before COVID-19.

The same dynamic is at play regarding ethnic diversity: Seventy-five per cent of businesses owned by a visible minority applied for a CEBA loan, compared with 65 per cent of all companies.

Frances Delsol, the Black Business and Professional Association’s (BBPA) vice president of national partnerships, outreach and procurement, said many businesses reached for the CEBA lifeline in the early months of the pandemic without having a clear plan on how to pay it back.

“I think they took it because the repayment date was so far away, but the pandemic really took its toll on Black businesses,” she said in an open letter to the Globe & Mail last July.

“All this means that any economic fallout from the upcoming CEBA repayment deadline will disproportionately harm businesses owned by women and members of racialized group,” according to the open letter released last summer by the BBPA, the Better Way Alliance, the Canadian Women’s Chamber of Commerce, the London Chamber of Commerce and KB Consulting, a small-business advisory firm.

Data from Statistics Canada reveals that approximately 25 per cent of CEBA loans were repaid by the end of 2023, leaving $37.5 billion outstanding. A recent Statscan survey projects that 76 per cent of CEBA loans will be fully repaid by the end of 2026, signalling potential challenges for small businesses and a financial hit for the federal government, which underwrites the program.

Randall Bartlett, senior director of Canadian economics at the Desjardins Group, said CEBA repayment could be a critical economic indicator impacting the economy in the coming year. While not predicting catastrophe, he suggests it may exacerbate existing weaknesses.

As the repayment deadline passes, outstanding CEBA accounts will transition from financial institutions to the Canada Revenue Agency (CRA). Dan Kelly, president of the CFIB, hopes this transition will address administrative issues that plagued the program, including errors leading to approximately 40,000 businesses having to repay loans in full.

“When you look at the sheer size of it, nearly every business with paid staff in the country took it,” Kelly told the Globe & Mail.