Prime Minister Justin Trudeau announced today, Thursday, that Canada is giving small businesses in Canada more time to repay the emergency loans provided during the COVID-19 pandemic.

The Liberals have decided, after continuous calls from businesses, to grant them another year to repay the Canadian Emergency Business Account (CEBA) loans, despite having previously taken the position that repayment deadlines are "final and cannot be changed."

Groups across Canada representing hundreds of thousands of small businesses have urged the federal government to grant them an extension.

The federal government created CEBA early in the pandemic as part of a range of financial aid measures aimed at keeping businesses afloat amid forced closures and health restrictions.

Initially, up to $40,000 was offered to small businesses and non-profit organizations that experienced revenue losses due to COVID-19, with an expansion later allowing businesses to apply for up to $60,000 in interest-free loans.

These loans were open for applications between April 2020 and June 2021, with loans approved for 898,271 companies, totaling $49.2 billion in federal aid.

In January 2022, following a surge in Omicron variants and new restrictions, the Liberals announced they would extend the repayment deadline by one year until the end of 2023. This means eligible companies "in good standing" will have until December 31, 2023, to repay one-third of their loan—up to $20,000—and qualify for loan forgiveness.

When the initial extension was announced, the government stated that loans due after the 2023 deadline will be converted to two-year term loans at a five percent interest rate, starting January 1, 2024, with the loans fully due by December 31, 2025.

Groups representing chambers of commerce, tourism, and local industries that urged the government to provide leniency in loan repayment have clarified that while the government has granted businesses struggling in crisis a lifeline through these loans, many are still struggling years later.

This has left many unable to achieve more than just reducing the debt they have incurred, facing supply chain and employment issues, as well as rising inflation. Without the extension, many local businesses—especially in the tourism sector—were facing the prospect of closing their doors forever.

NDP leader Jagmeet Singh also called on the federal government to extend the deadline.

Before Thursday's announcement, the office of Deputy Prime Minister and Finance Minister Chrystia Freeland stated that it was aware of small businesses' concerns but gave no indication that the minister was considering extending the loan repayment deadline.

As of May 31, nearly 21% of businesses that received a CEBA loan had fully repaid it.