Write-Off From Pandemic Loan Relief Program May Cost Canadian Taxpayers Billions

The Canada Revenue Agency headquarters Connaught Building is pictured in Ottawa on Aug. 17, 2020. (Sean Kilpatrick/The Canadian Press)

Canadian taxpayers may be on the hook for $2.4 billion due to a projected write-off of debts from a pandemic loan relief program, federal records show.

The expected loss stems from the $42.9 billion Canada Emergency Business Account (CEBA) program, which offered loans to business owners affected by lockdown orders during the COVID-19 pandemic.

The amount was disclosed as a result of a request by 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 Canada Emergency Business Account loans projected to be written off as bad debt or other reasons such as fraud.”

Cabinet, in an Inquiry of Ministry tabled in the House of Commons, put the figure at $2.4 billion, though loans are not repayable until Dec. 31, 2023.

“The dollar value of loans written off to date is $1.3 million,” the Inquiry of Ministry said. “Financial institutions administer the program and can only write off if the loan is to a borrowing customer and the financial institution is writing off some or all of its own loan.”

The CEBA program was open for applications from April 9, 2020, till last June. By January this year, it had provided more than $49 billion to nearly 900,000 Canadian businesses, according to Department of Finance Canada.

The program initially offered $40,000 in interest-free loans. About six months after its rollout, it was expanded to $60,000 with a third forgiven—a maximum of $20,000—on final repayment.

On Jan. 12, the federal government extended the repayment deadline to the end of December next year.

Speaking virtually at a press conference that day, Small Business Minister Mary Ng said the extended deadline “will help businesses get that flexibility and continue to work together through this pandemic till the end.”

“I want to assure Canadian businesses we’ve had your back from day one,” Ng said. “We are going to continue to do that.”

‘Lack of Clarity’

According to Blacklock’s Reporter, the cabinet gave no rationale for the multi-billion write-off. The federal finance department has likewise declined to explain loans offered to businesses that never qualified in the first place, said the media outlet.

The government’s website states that the CEBA program is specifically offered to “small businesses and not for profits.” However, the finance department in a Nov. 19, 2020, Inquiry of Ministry disclosed that $203 million in loans went to borrowers categorized as “public administration,” the media outlet added.

Tory MP Marty Morantz who requested the data said at the time he would request the finance department to release more records for clarity.

“Given the lack of clarity on what types of organizations fall under the ‘public administration’ category, I will be submitting a further Order Paper question,” he said.

Access to Information documents show Finance Minister Chrystia Freeland’s office could not disclose further details of the loan borrowers.

“Examples of such businesses cannot be provided without prior consent from the financial institution and the borrower,” staff wrote in a Dec. 9, 2020 email, obtained by Blacklock’s Reporter.

Federal managers were “working closely with Canadian financial institutions to deliver these loans to qualifying businesses,” it said.