canadian taxpayers could be on the hook for $2.4 billion due to a planned cancellation of debts from a pandemic loan relief program, according to federal records.
The expected loss stems from the $42.9 billion Canada Emergency Business Account (CEBA) program, which provided loans to business owners affected by lockdown orders during the Covid-19 pandemic.
The amount was disclosed following a request from Conservative MP John Williamson, who represents the riding of New Brunswick Southwest, according to Blacklock’s Reporter.
The MP asked for figures on “the dollar amount of loans from the Canadian Business Emergency Account that should be written off as bad debts or for other reasons such as fraud.”
Cabinet, in a departmental inquiry tabled in the House of Commons, put the figure at $2.4 billion, although the loans are not repayable until December 31, 2023.
“The dollar value of loans written off to date is $1.3 million,” the department’s investigation said. “Financial institutions administer the program and can only write off if the loan is for a borrowing customer and the financial institution writes off some or all of its own loan.”
The CEBA program was open for applications from April 9, 2020 to last June. By January of this year, it had provided more than $49 billion to nearly 900,000 Canadian businesses, according to the Department of Finance Canada.
The program initially Free $40,000 in interest-free loans. About six months after its rollout, it was extended to $60,000 with a third waived – a maximum of $20,000 – upon final repayment.
On January 12, the federal government extended the refund period until the end of December next year.
Speaking virtually during a press conference On the day, Small Business Minister Mary Ng said the extended deadline “will help businesses get that flexibility and continue to work together through this pandemic until the end.”
“I want to assure Canadian businesses that we’ve had your back since day one,” Ng said. “We will continue to do so.”
‘Lack of clarity’
According to Blacklock’s Reporter, the firm gave no justification for the multi-billion write-off. The federal finance ministry also refused to explain the loans offered to businesses that never qualified in the first place, the outlet said.
The government website states that the CEBA program is specifically offered to “small businesses and not for profit”. However, the finance department, in a November 19, 2020 departmental investigation, found that $203 million in loans went to borrowers classified as “public administration“, added the media.
Tory MP Marty Morantz, who requested the data, said at the time that he would ask the Finance Department to release more documents for clarity.
“Given the lack of clarity on the types of organizations that fall under the ‘public administration’ category, I will submit another question to the Order Paper,” he said.
Access to Information documents show Finance Minister Chrystia Freeland’s office could not release more details about the borrowers.
“Examples of such businesses cannot be provided without the prior consent of the financial institution and the borrower,” the staff wrote in a Dec. 9, 2020 email, obtained by Blacklock’s Reporter.
Federal managers were “working closely with Canadian financial institutions to make these loans available to eligible businesses,” he said.