Small business owners are a resilient bunch and will ideally cope with the less-than-stellar economic conditions anticipated for the next year or two. If nothing else, this experience will inform businesses further about the dangers of believing government is trying to help. Photo Credit: The Canadian Press/Nathan Denette.Â
This week was the deadline for small businesses to pay off their CEBA (Canada Emergency Business Account) loan or lose the advantage of not having to pay back the “forgivable” loan portion. The rules around this federal government program, which was designed to assist small businesses during the pandemic, were that up to a third of the loan would not have to be repaid if the remaining portion was fully paid off by the deadline of Jan. 18, 2024.Â
For example, on a $60,000 loan (the maximum amount available), $20,000 would not need to be paid back if the remaining $40,000 was paid off by the deadline. Another possibility for small businesses having trouble paying back the non-forgivable portion is to apply to the financial institution that originally provided the CEBA loan for the amount necessary to finance the loan, and a slight extension will be granted until March 28, 2024.Â
About 885,000 businesses and not-for-profit organizations took advantage of the CEBA program, at a total cost of $48 billion. Small businesses had been asking for an extension until the end of 2024 to pay off the necessary loan amount to be able to take advantage of the loan forgiveness portion. The Parliamentary Budget Officer has estimated that to extend the deadline until the end of this year would “cost” the federal government about $900 million.Â
Considering the many billions of dollars of taxpayer money wasted in various pandemic expenditures, it doesn’t seem like too much to ask for the federal government to extend the deadline for another 11 months. Canada’s Auditor General found that a “minimum” of $27.4 billion was spent in suspicious COVID benefit payments, and that the lack of rigour practised by the Canada Revenue Agency (CRA) in attempting to collect these overpayments means they will likely never be recovered.Â
Many more billions were distributed to Liberal friends, supposedly to supply various pandemic-related products, many of which never materialized. Compared to other developed countries, Canada spent about two times per capita what the others spent on average, and did not have any better performance during the pandemic as a result of all of this extra spending. In fact, Canada underperformed other countries that demonstrated a much more prudent use of taxpayer dollars.Â
The Trudeau Liberals have been a very big-spending government from the moment they were elected, and seemed to use the pandemic as an excuse to direct even more money to their friends and supporters. The notion of spending another $900 million to keep potentially thousands of small businesses operating and retain all the jobs they provide seems like a very reasonable price to pay with a good return on investment.Â
It’s not really surprising that the Trudeau government would not cut small business some slack on CEBA, as this government has never been small-business friendly. Early on in his tenure, Trudeau himself stated that many small businesses structured themselves that way merely to take advantage of various tax measures, implying they were tax cheats. This statement was factually incorrect, but did show an inherent bias against the small business sector held by Trudeau and his colleagues.Â
Leftist governments in general have never been supporters of small business as they misunderstand their enormous contributions to the economy and prefer to deal with large corporate crony capitalists as a part of their government-directed industrial strategies. Small businesses thrive on competition and free markets, which left-leaning governments work to suppress.Â
In Canada, small- and medium-sized businesses represent about half of Gross Domestic Product and the majority of net new jobs created, so any government that downplays this sector and implements policies that are harmful to it are foregoing much economic growth and job creation. And this has indeed been the record of the Trudeau Liberals, as their abysmal economic policy performance illustrates.Â
A main problem for small firms working to pay back their CEBA loans is that the economy continues to be sluggish even though the pandemic is behind us. About half of small businesses have not yet returned to pre-pandemic revenue levels and are struggling with ongoing inflation, a low dollar making imports more expensive, rising wage costs and higher interest rates. Ironically, many of the Trudeau governments bad economic policies have worsened these factors in Canada, yet they refuse to help the small businesses that are paying the price for their bad policies.Â
Going forward, one can only hope that the Liberal government’s intransigence on this issue will not lead to the bankruptcy of many small businesses and the loss of jobs they provide. Small business owners are a resilient bunch and will ideally cope with the less-than-stellar economic conditions anticipated for the next year or two. If nothing else, this experience will inform businesses further about the dangers of believing government is trying to help.
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.