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Facing Potential Closures, Canadian Tourism Businesses Seek Extended CEBA Loan Repayment Deadline

In a pressing appeal to the Canadian government, tourism associations across the country are calling for an extension to the Canada Emergency Business Account (CEBA) loan repayment deadline. Their urgent plea is underscored by a stark revelation: 45% of Canada’s tourism businesses are likely or somewhat likely to close within the next three years without government intervention into their mounting debt load.

This alarming statistic highlights the dire financial straits many in the tourism sector, including campground and RV park operators, find themselves in, emphasizing the critical need for timely government action.

In an open letter on July 24, over 280 industry associations across Canada reached out to Canada’s Minister of Finance, the Honorable Chrystia Freeland, to urge the federal government to extend the CEBA repayment deadline.

The open letter states, “Industry associations representing hundreds of thousands of businesses across Canada are urging you to extend the current Canada Emergency Business Account (CEBA) repayment deadline by two years to the end of 2025, or at least by one year, while maintaining access to the forgivable portion.” 

A pivotal reason behind this request is the findings from a debt study conducted by the Tourism Industry Association of Canada (TIAC). 

The survey, carried out by Nanos for TIAC, highlighted that financial controllers in the tourism sector are not confident about their company’s ability to make debt payments over the next two years. 

The 149 who were surveyed between April 28 and May 12 expressed varying levels of confidence regarding their company’s ability to make debt payments due over the next two years, with 25% saying they were “somewhat not confident”, while 30% stated they were “not confident” at all. On the other hand, 28% felt “somewhat confident”, and only 11% were fully “confident” in their company’s ability to meet these obligations.

The primary barrier to servicing existing debt was identified as the lack of profitability (58%). This was followed by onerous repayment terms (19%) and the debt burden being too high (15%).

Moreover, the participants ranked debt forgiveness (81%) as the top solution to aid their company’s capacity to service debt, followed by providing a longer time period to repay (12%) and suspending interest for a period of time (2%).

The letter further emphasized the challenges faced by businesses, noting that “Mandatory business closures and other government health restrictions left businesses with severe income losses and cash flow issues.” It also pointed out the financial pressures due to high interest rates, inflation, and increased labor costs.

A comprehensive survey on business conditions of over 15,000 Canadian businesses by Statistics Canada in June revealed that inflation, input costs, and interest/debt expenses rank as the top three challenges, with 56%, 40%, and 38% of businesses citing them, respectively. Notably, smaller businesses feel the pinch of debt even more.

Highlighting the urgency, the associations emphasized, “With each passing day, entrepreneurs who collectively maintain a very considerable workforce, face increasingly daunting financial pressure.” 

“Ottawa needs to act now to extend the CEBA repayment deadline,” the letter reads.

The open letter also provided alarming statistics, stating that “49% of small businesses are still making below normal revenues (according to the Canadian Federation of Independent Business)  and 45% of Canada’s tourism businesses are likely or somewhat likely to close within the next three years without government intervention into their mounting debt load (per the Tourism Industry Association of Canada).

The CEBA program has offered interest-free, partially forgivable loans to nearly 900,000 small-scale businesses and non-profit organizations—businesses the industry leaders believe “had no choice but to take on this loan due to circumstances beyond their control”.

Last year, as the Omicron variant slowed the recovery of businesses across various parts of Canada, the government extended the CEBA loan repayment

The deadline for repayment of CEBA loans to qualify for partial loan forgiveness was extended from December 31, 2022, to December 31, 2023, for all eligible borrowers with good credit standing.

Repaying the loan on or before the new deadline will result in loan forgiveness of up to a third of the loan amount, translating to up to CA$20,000. Outstanding loans could be converted into two-year term loans, with an interest rate of 5% per year starting on January 1, 2024, with the loans fully due by the end of December 2025.

The associations warned of the consequences if the deadline isn’t extended, stating, “Unless the federal government acts quickly to postpone the CEBA repayment deadline, businesses that are unable to repay their CEBA loan in time will lose access to the forgivable portion of up to $20,000, thus further increasing their debt load.”

The collective voice of these associations aims to highlight the significance of the CEBA repayment issue. The tourism sector, which includes many campground and RV park businesses, has been severely impacted by the pandemic. Extending the CEBA repayment deadline is seen as a crucial step for the stability and recovery of this sector.

“Extending the repayment timeline for the CEBA loan without losing access to the forgivable portion would give many small-and-medium size businesses the stability and certainty they need to get back on their feet on a path to prosperity.”

For those interested in delving deeper into the open letter to Deputy Prime Minister Freeland, it can be accessed here.

As the tourism sector navigates its way toward recovery, the support and understanding of financial institutions and the government will play a pivotal role. The collective voice of industry associations is making sure that these concerns are heard and addressed.


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Hi, you might find this article from Modern Campground interesting: Facing Potential Closures, Canadian Tourism Businesses Seek Extended CEBA Loan Repayment Deadline! This is the link: https://moderncampground.com/canada/facing-potential-closures-canadian-tourism-businesses-seek-extended-ceba-loan-repayment-deadline/