Ottawa extends $40,000 business loan program to Oct. 31

Ottawa has extended the Canada Emergency Business Account (CEBA) program that provides $40,000 loans for companies struggling due to the coronavirus pandemic.

The government announced on Monday that CEBA will be extended, allowing qualifying businesses to apply for the loan until Oct. 31. Both CEBA and the government’s Canada Emergency Rent Assistance (CECRA) program were set to expire on Monday.

Finance Minister Chrystia Freeland also announced Monday that the government will be working with financial institutions to make the program available to businesses that have been unable to qualify for this program, such as those operating with personal bank accounts instead of business ones.

“We are moving as expeditiously as possible with financial institutions,” Freeland said.

“We’ve listened to small businesses, we’ve heard what you need and we are acting.”

CEBA provides interest-free loans of up to $40,000 to small businesses and not-for-profits. Up to $10,000 of that loan is forgivable if certain conditions are met. The program, which was initially unveiled in April, was extended in June to allow owner-operated businesses without a payroll and family-owned corporations to qualify for the program.

The Canadian Federation of Independent Business (CFIB) had called on the government to extend and expand both CEBA and CECRA.

CFIB president Dan Kelly said in a statement released Monday that the group is pleased by the government’s decision to extend CEBA and expand eligibility, but that more changes can be made to improve the program. Those changes include increasing the maximum loan amount to $60,000, given the length of the pandemic.

“CEBA has been a crucial lifeline to 730,000 small firms, including 60 per cent of CFIB’s members,” Kelly said.

“We call on government to deliver further CEBA changes and a similar approach on improving the CECRA program to support commercial rent.”

The government did not announce an extension of CECRA. When asked by reporters whether the CECRA program is coming to an end, Freeland said she has been discussing the program – and rent relief in general – with her provincial and territorial counterparts, but did not confirm if it will continue.

“I have been talking over the past few days with many of the finance ministers of provinces and territories about ways we can support Canadian small business, including when it comes to covering their fixed costs, of which rent is a very, very big share,” Freeland said.

“We’re working on it, and we’re going to have more to say about it very soon.”

According to a survey conducted by the CFIB, CEBA was one of the government’s most effective programs for small business. The survey found that 60 per cent of small businesses reported using CEBA, making it the most popular program of those offered to businesses, with 69 per cent finding the program either very or somewhat helpful.

That is significantly more than CECRA, which has been widely criticized for having strict program requirements. The same survey found that just 15 per cent of small businesses used the CECRA program, and 20 per cent rated it either very or somewhat helpful.

CECRA provided forgivable loans that covered 50 per cent of rent to property owners if they reduced rent by at least 75 per cent from April to August. Landlords and tenants were on the hook for 25 per cent of rent each. Companies that have seen a 70 per cent decline in revenues due to the pandemic and pay no more than $50,000 in rent each month are eligible for assistance.

Many businesses and industry groups have criticized the program for requiring landlord participation, as well as the 70 per cent revenue decline threshold. The CFIB has been calling on the government to change the program and allow tenants to access CECRA funding, regardless of landlord participation.

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