Business is up heading into 2022, but so too are worries about paying off COVID-19 debt

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As the clock ticked down to 2022, so too did the deadline for businesses to repay federal pandemic loans under favourable financial conditions. Then, two weeks before Christmas, Finance Minister Chrystia Freeland said the deadline would be extended. Now, businesses are wondering how long they have to repay, and what the rules are.

The 40-strong team of workers at the Canadian Federation of Independent Business that takes calls from the association's members has been hearing a lot about loans.As the clock ticked down to 2022, so too did the deadline for those businesses to repay federal pandemic loans under favourable financial conditions. And with it, worries from small businesses grew about how to pay off the emergency loans.

Since its launch, the Canada Emergency Business Account has provided loans worth CAD$48.4 billion to almost 886,000 companies, the largest portion of whom, at nearly 41 per cent, are in Ontario. Kelly said the deadline made sense when it seemed the country would go into a lockdown to slow the spread of COVID-19 and come out in a few weeks or months.

The CFIB had been pushing the federal government to roll back the repayment deadline to December 2024 to help more recipients take advantage of the zero-interest and forgiveness options. "We need the details as to when these loans are going to be due so that businesses can start to plan," Kelly said.The labour market by the end of the summer recouped all the losses from the onset of the pandemic last year and the unemployment rate in November was within 0.3 percentage points of the pre-pandemic level recorded in February 2020.

Missing the repayment deadline doesn't mean the government will force a company to repay funds, regardless of their financial situation. Instead, a recipient would lose the ability to have a part of the loan forgiven, and start facing an annual interest rate of five per cent.

 

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