Nearly 50,000 Canadian small and medium-sized businesses have received a notice informing them that they are not eligible for the forgivable component of a loan made under the Canada Emergency Business Account (CEBA).

That’s nearly 6% of the 900,000 loans guaranteed by the federal government under CEBA, Export Development Canada confirmed in an email. The CEBA is an interest-free federal loan program for small businesses that have struggled during the pandemic. It allows you to borrow up to $60,000. Eligible borrowers can receive loan forgiveness for one-third of the loan, up to a maximum of $20,000, if they repay the entire loan before the end of 2023.

The fact that 50,000 companies are ineligible for the forgivable component of CEBA worries the Canadian Federation of Independent Business (CFIB). “There are companies that applied in good faith and those companies received the loan in good faith,” said Jasmin Guénette, vice president of national affairs at the CFIB. Suddenly we find ourselves in a situation where these companies are classified as ineligible following a procedure that is not particularly transparent. »

Mr. Guénette finds it difficult to understand why so many companies are not eligible for loan forgiveness. “We ask ourselves, ‘What are the criteria that will ensure that the government deems the company illegitimate?'” He points out that the CEBA criteria have expanded over time and this is causing confusion among SME owners regarding the admission criteria and the required documents.

It was not possible to obtain an immediate explanation from Export Development Canada as to the main reasons why contractors were found ineligible.

It should be noted that the approximately 50,000 targeted companies will continue to benefit from the interest-free loan from CEBA until the end of December 2023. However, they do not have to pay back two-thirds, but in full.

The Canadian Federation of Independent Business is asking the Trudeau government to be more flexible in applying eligibility criteria. “Apart from the undeniable cases of fraud, we call on the government to authorize the SMEs that have benefited from the loan to keep the subsidy share, or at least initiate an arbitration procedure so that the companies can explain why they considered their application to be worthwhile allowed. »

The lockdown notices come at a time when many small businesses are still living with the aftermath of the pandemic. Mr. Guénette points out that according to a survey of its members, half of Canadian SMEs would not have returned to their pre-pandemic income threshold and that two-thirds would have incurred debt as a result of the pandemic. “It will be a heavy blow for a number of SMEs. »

To see in the video