Liberals going ‘as fast as we can’ to refine small business program

OTTAWA • The Liberal government on Thursday said it was working to amend a key loan program available to small businesses, after a large number of cash-strapped companies said they were unable to access the government support.

In testimony before the House of Commons Finance committee on Thursday, Small Business Minister Mary Ng was unable to specify when her office would tweak its $25-billion small business loan program, saying only that the changes would come “as quickly and as fast as we can go.”

Small companies that do not have a commercial account with a major bank have remained ineligible for the Canada Emergency Business Account (CEBA), leaving many firms without government relief as economic lockdowns enter their third month. Small businesses that make few transactions or that have small payrolls often operate through personal bank accounts rather than commercial ones.

“We’re working hard to make sure that we find a solution for these businesses as well through this challenging time,” Ng said.

The CEBA offers interest-free loans of up to $40,000 for small businesses to soften the economic fallout from the COVID-19 pandemic. It is expected to cost about $25 billion.

The program has gone through several iterations after businesses last month complained that the loans unfairly excluded firms with payrolls under $50,000, which disqualified many. This week, Prime Minister Justin Trudeau expanded the loan program to include firms with smaller payrolls; those using personal accounts remain ineligible.

In a statement on April 14, the Canadian Federation of Independent Business said the CEBA provided “welcome relief” for firms, but said one in five businesses were deemed too small for the program due to payroll thresholds. Around 80 per cent of CFIB’s 110,000 members are either partially or fully closed due to lockdowns.

More than 621,000 companies have applied for loans under the CEBA, Ng said Thursday, but was unable to provide figures on how many applications have so far been rejected.

Robert Maich, of legal firm Maich Holdings Ltd., said one of his clients, a small firm with just three employees, has been unable to access the $40,000 loans because it does not have a commercial bank account.

He said the rationale for the exclusion of personal bank accounts has never been explained publicly by EDC, leaving would-be applicants in the dark. “They’re simply not even stating the exact wording of what they’re telling the banks in regards to these CEBA loans.”