When word got out at ACTA’s Toronto summit last week that the Canadian government was extending the repayment deadline for its Canada Emergency Business Account (CEBA) program, the news was met with applause.
But now that ACTA – now known as The Association of Canadian Travel Agencies and Travel Advisors – has taken a closer look at the government’s offer, it’s retracting its praise.
In a press release Tuesday (Sept. 20), ACTA said it was initially “delighted” to hear about the temporary relief that offered hope to heavily-indebted businesses, but was later “very disappointed” to read the actual details of the update when they surfaced.
“Hours after the announcement, new details appeared on the Department of Finance website that described a very different picture,” stated Wendy Paradis, ACTA’s president.
“Although more time to repay CEBA loans was being offered, the government was taking away the key element of the program – the interest-free partial loan forgiveness offered (worth up to $60,000 – if businesses repay the full amount by the deadline,” Paradis said.
“Instead of carrying forward the interest-free partial loan forgiveness to the new deadline, the government instead is providing only an 18-day extension to qualify for it – until January 18, 2024. If the loan is not repaid by this date, outstanding CEBA loans will be administered by financial institutions subject to five per cent interest.”
“Instead of extending forgiveness, the government is charging interest. This is unacceptable.”
Prime Minister Justin Trudeau, last Thursday (Sept. 14), announced that the government would extend the repayment deadline for its small business pandemic loan program by one year. The loan previously had a deadline set for Dec. 31, 2023.
The fine print, however, is that businesses will lose the forgivable portion of the loan if they don't repay it in the coming months.
CEBA was introduced during the pandemic to help small businesses who were forced to close or limit their operations due to public health restrictions.
The program offered interest-free loans backed by Ottawa, and the deadline to repay has been extended several times.
The original deadline was marked for the end of 2022, and it was later extended to the end of 2023.
Nearly 900,000 businesses were approved for CEBA, which distributed more than $49 billion in loans. But, according to the CBC, only 21 per cent of businesses had fully repaid their loans as of May 31.
The topic is relevant to PAX readers as many travel agencies, and travel advisors, accessed pandemic-era loans from the government during the pandemic – the CEBA being one.
Recent data released by ACTA suggests that many advisors who accessed loans are still carrying the debt, and aren’t yet in a position to repay.
Paradis said that while ACTA is thankful that the government announced more time to repay CEBA and RRRF loans, it is critical that the interest-free forgivable portion of both also be extended immediately.
According to ACTA’s recent survey, travel agencies and independent travel advisors continue to struggle with significant debt as a result of enduring and recovering from the pandemic: 27 per cent of businesses owe at least $100,000; 56 per cent owe at least $50,000; 80 per cent owe at least $10,000.
In addition, 36 per cent of respondents say it is likely or somewhat likely their business will close within three years.
Double down on advocacy
With Parliament’s return this week, advocacy efforts will intensify through Dec 3, 2023 with a “vigorous advocacy strategy,” which includes the letter writing campaign that began on August 29 and collaboration with stakeholders, ACTA says.
“We need to make it clear that this CEBA extension is by no means enough to help our members,” said Paradis. “We will continue to work alongside other stakeholders in our coalition to make sure the message gets through.”
ACTA is asking that the deadline to repay CEBA and RRRF loans be extended by two years from Dec 31, 2023 to Dec. 31, 2025 – and that the government extend access to the interest-free forgivable portion of both for two years.
ACTA will also advocate for relief on federal HASCAP (Highly Affected Sectors Credit Availability Program) loans, though terms of that program are different than CEBA and RRRF.
The association says it will target the Government of Canada in their efforts, including Members of Parliament, Finance Minister Chrystia Freeland and additional cabinet members.
Missing the mark
Last week, the Tourism Industry Association of Canada (TIAC) was among the first organizations to express its disappointment in the CEBA extension.
"We must emphasize that a mere three-month loan forgiveness extension for businesses needing to refinance does not align with the severity of the crisis," President Beth Potter said in a statement. "This falls short of adequately addressing the immense financial strain and uncertainty that our members are experiencing."
The short extension raises “concerns about the viability” of many tourism businesses, particularly small and medium-sized enterprises in communities right across the country, TIAC said.
The association is urging Ottawa to reevaluate its decision and extend the forgiveness period “significantly to provide necessary breathing space for a full recovery.”
“Such an extension would offer a lifeline to businesses striving to rebuild and contribute to Canada's economic revival, TIAC said.