With a key deadline to repay pandemic-era loans just over a month away, one small business owner says he’s only now being told he never qualified for the loan in the first place.
The Canada Emergency Business Account (CEBA) was introduced at the height of the pandemic to support small and medium-sized businesses that were forced to close or restrict operations due to public health measures. This program provided interest-free loans backed by the federal government.
Businesses can apply for up to $60,000 through this program. Up to $20,000 can be forgiven if businesses repay the majority of their loans by January 18th.
Pauline Penn Skinner, who owns a small wholesale business in Richmond Hill, Ont., said she is preparing to pay off most of her loan in order to qualify for partial debt forgiveness. But she said earlier this month she was told by her bank, HSBC, that she was not eligible to receive funds she received more than three years ago.
“I was completely disappointed. Since receiving the CEBA funds, there was never any indication up until then that I was not eligible,” she told CBC News.
Penn Skinner said she has now been told she is scheduled to repay the loan in full by Dec. 31.
“I’m very disappointed and very angry. I just think this is unprofessional and unethical,” she said.
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Nearly 900,000 businesses were approved for CEBA financing. However, more than 50,000 of those beneficiaries were later deemed ineligible for the loan, according to the government’s response to a House of Commons order document question.
A spokeswoman for Finance Minister Chrystia Freeland’s office said that after the CEBA program ended in 2021, companies should have received two notices from banks if they were deemed ineligible.
HSBC told CBC News it cannot comment on specific incidents for privacy reasons. The bank said all customers will be notified whether their CEBA status will be denied or asked to provide further information if their status is in doubt.
Penn Skinner said she did not receive any alert that her eligibility status had changed before December.
“I’m doing everything in my power to find a means or a way to get some understanding as to why I was disqualified,” she said.
Dan Kelly, president and CEO of the Canadian Federation of Independent Business (CFIB), said Penn Skinner may not be alone in her predicament.
Kelly said the CFIB has heard from dozens of companies in recent weeks saying their eligibility is now in question.
“What’s amazing is…on the eve of the deadline for forgiveness, we’re hearing from these companies reporting in good faith that this is news to them,” he said.
Kelly said ineligible businesses should have been notified by now. He said he thinks there may have been something wrong with those notices.
“There were so many calls like this that it suggests there was something wrong with the communications,” he said.
When asked if the government could reconsider the applications of companies deemed ineligible for CERB financing, a Freeland spokesperson said companies could amend their applications if they were deemed ineligible after the fact. He said that a remedial process has been established.
A spokesperson said no fines would be imposed on ineligible businesses that must repay their loans.
“The flexibility we are providing will be critical support for small businesses that are still struggling to make a living,” a spokesperson said in an email.
But Penn Skinner said it wasn’t fair how she was told to pay back the money at the last moment.
“If you really want to know the truth, I’m scared and dumbfounded,” she said.
