A hand painted sign about the Canada Emergency Business Account is seen in the front window of Frances Watson, a store on Queen St. West, on April 15, 2020.Fred Lum/the Globe and Mail

Small-business groups are asking the federal government to further extend the deadline for repaying Canada Emergency Business Account loans when the budget is tabled later this month, as few of the loans have been repaid.

Ottawa announced the creation of the CEBA program on April 9, 2020, and sent more than $49-billion to almost 900,000 businesses. It was the first and most widely used pandemic support program for businesses.

The original repayment deadline for the interest-free, partially forgivable loans was Dec. 31, 2022; after that, businesses would start paying interest and forfeit the forgivable portion of the loans. Last year, citing the challenges posed by the Omicron variant, Ottawa extended the deadline by 12 months.

But almost three years after the program began, most of the loans are still outstanding. Export Development Canada, the Crown corporation that oversees CEBA, told The Globe and Mail that just 13 per cent, representing $5.7-billion, were repaid as of the end of November, 2022. EDC first provided these figures to CBC.

The reason: Many of those businesses are still struggling with debt incurred during the pandemic, business groups say.

Olivier Bourbeau, Restaurants Canada’s vice-president of Quebec and federal affairs, said his association recently surveyed its members and found that 20 per cent of those who had not yet repaid their CEBA loans were not sure they ever could. About 30 per cent of its members reported having a pandemic-related debt of more than $100,000.

Data from the Office of the Superintendent of Bankruptcy shows there were 533 insolvencies in the accommodation and food-services sector in the 12 months ending Jan. 31, up from 377 in the prior 12 months – an increase of 41 per cent.

Under the current rules, CEBA loans are worth either $40,000 or $60,000 and are interest-free and partly forgivable ($10,000 for the smaller loans, $20,000 for the larger ones) if the balance is repaid by Dec. 31, 2023. After that, the forgivable portion is forfeited, interest begins to accrue at a 5-per-cent rate, and the loan goes to collections if not repaid in full by Dec. 31, 2025.

Restaurants Canada has proposed the government phase out the loan forgiveness over six-month periods, so that even financially strapped businesses that can’t meet the 2023 deadline can still benefit from some forgiveness. Under that schedule, a business could still see $14,286 of a $60,000 loan forgiven if it is repaid by Dec. 31, 2024.

Mr. Bourbeau said this would help resolve one of CEBA’s problems – namely, that businesses in the best financial shape right now are more able to reap the benefits of the program than those that need the most help.

“We want to make sure restaurants will reimburse their loans and stay in business and continue to employ people,” he said.

Dan Kelly, president of the Canadian Federation of Independent Business, which lobbies on behalf of more than 95,000 small businesses, said his feeling is that Ottawa would like to turn the page on pandemic support programs. But that ignores the fact that debt is still a live issue for many businesses.

“While I’m sympathetic to that view – I never want to speak about COVID ever again – I don’t think that’s a wise idea because of the anchors of debt hanging around the necks of hundreds of thousands of small business owners right now, he said.

The CFIB is asking the government to extend the loan-forgiveness deadline to Dec. 31, 2024.

The group is also asking the government to extend partial loan forgiveness to the 50,000 businesses that were only told last fall that they should never have gotten a CEBA loan in the first place and had to repay the full amount.

Adrienne Vaupshas, ​​spokesperson for Finance Minister Chrystia Freeland, indicated the government is watching the repayment rates. She said the deadline has already been extended once “so hard-working business owners can focus on getting their operations back up and running and rebuilding their businesses.”

The federal budget is expected to be tabled March 28.

EDC spokesperson Louis-Antoine Paquin said CEBA was created in partnership with private companies, making it challenging to track repayments.

“CEBA loans are currently managed by over 230 Canadian financial institutions and are not yet due; therefore, the details you are seeking may not be available until after the repayment deadline,” he said in an e-mail.

The Globe recently revealed that much of the administration of CEBA was outsourced to global consulting firm Accenture Inc., at a cost of more than $61-million by Aug. 13, 2021.

A 2020-21 report on EDC’s Canada Accounts shows that financial institutions were also paid a total of $92-million in administrative fees in that fiscal year.