The chief executive of a fintech company says he’s observed small businesses scrambling to meet Thursday’s deadline to repay their federal pandemic loans, with thousands applying for refinancing options his company offers.
After being extended several times, the deadline for businesses to repay their loans through the Canada Emergency Business Account (CEBA) and receive partial forgiveness finally arrived on Thursday.
David Gens, founder and CEO of Merchant Growth, told BNN Bloomberg that there was a “crazy exponential scramble” among businesses who were trying to repay loans they took out in 2020 or 2021.
“People really did leave it to the last minute (in) a lot of cases,” Gens said in a television interview Wednesday ahead of the deadline.
Gens said many waited until the eleventh hour because there was hope of another extension. But lobbying efforts to push the date back were ultimately unsuccessful, with Prime Minister Justin Trudeau throwing cold water on the idea on Wednesday.
As a result, some of those holdouts were scrambling up until the final days and hours to meet the deadline, Gens said.
Up to one-third of the loans could be forgiven if the outstanding amount is repaid by Thursday, otherwise the debt will convert into a three-year loan with five-per-cent annual interest.
Those businesses that didn’t meet the deadline will lose out on the forgivable portion of the loan and will start accruing interest until Dec. 31, 2026.
Businesses that take the option of refinancing their loans with a financial institution have until March 28 to set up new terms, and still be eligible for the forgivable portion of the loan.
Most businesses took out CEBA loans either at $40,000 or $60,000, Gens explained, and if they repay up to $40,000 now, they can have $20,000 forgiven.
Merchant Growth is one of the financial institutions offering refinancing, and Gens said he saw applications pile up as the deadline approached.
In the run-up to Thursday, Merchant Growth saw thousands of financing applications arriving each day for loans of $40,000, Gens said, as well as a “fair number” of requests for $30,000 loans.
Today (Jan 18) is the last day for a small business to apply for a bank loan to repay their #CEBA loan. If you hustle and apply today, you will have until Mar 28 to get the loan in place while protecting the forgivable portion of the loan. Even if ultimately rejected, you'll…
— Dan Kelly (@CFIB) January 18, 2024
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2024-01-18 15:09:48Z
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