CEBA Loan Repayment Deadline: What You Need to Know About the Economic and Fiscal Impacts

Nearly 900,000 businesses were approved for a Canada Emergency Business Account (CEBA) loan, of which almost 575,000 received an additional expansion, for a total of $49.2B in funds approved. More than half of businesses in Canada received the loan, a share that is highest among smaller businesses and in the accommodation and food services sector.

While full repayment by January 18, 2024, will allow companies to take advantage of the grant portion (as much as 33% up to $20,000), it looks like more than one quarter of companies with CEBA loans will not be in a position to do so. As such, a meaningful share of outstanding CEBA loans is likely to be rolled into a 3-year loan with a 5% interest rate that will need to be repaid by the end of 2026.

CEBA loans supported many small businesses in Canada during the pandemic. Real GDP and employment were higher than they would have been otherwise as a result. But so were inflation and interest rates. Looking ahead, we've estimated that compared to a scenario where CEBA loans were forgiven in their entirety, the level of employment will be nearly 85,000 lower at the end of 2026. However, inflation and interest rates will be lower as well, providing relative affordability relief to all Canadians.

We think the near-term fiscal impact of the CEBA loan program will be minimal, with the federal government pushing much of the downside risk to the budget balance to the end of 2026. We haven’t changed our federal deficit outlook as a result. That said, if the federal government were to delay or even forgive outstanding CEBA loans, it would contribute to larger deficits and higher debt, risking additional upward pressure on interest rates.