Federal loan relief program for businesses may cost taxpayers billions

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Canadian taxpayers could be on the hook for $2.4 billion because of a pandemic loan relief program, according to a Blacklock’s Reporter story.

The loss was projected though cabinet extended a payment holiday for business borrowers to Dec. 31, 2023.

This stems from the $49.2 billion Canada Emergency Business Account program.

This information came to light after a request by Conservative MP John Williamson (New Brunswick Southwest).

Williamson 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 Commons placed the figure of $2.4 billion though loans are not repayable for over a year.

“The dollar value of loans written off to date is $1.3 million,” said the Inquiry. “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.”

Parliament put the program in place to help small businesses hurt financially by pandemic lockdown orders.

Offers of $40,000 interest-free loans were expanded to $60,000 with a third forgiven, a maximum $20,000, on final repayment.

“I want to assure Canadian businesses we’ve had your back from day one,” Small Business Minister Mary Ng said on Jan. 12 in extending a repayment deadline. “We are going to continue to do that. We want to make sure we continue to work together so that we can get through his pandemic.”

Cabinet hasn’t given a reason for billions in write-offs.

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The Department of Finance has also refused to explain business loans that didn’t qualify for the program.

Access To Information documents show Finance Minister Chrystia Freeland’s office was unaware of why payments were made to government-run companies.

“Examples of such businesses cannot be provided without prior consent from the financial institution and the borrower,” staff wrote in a December 9, 2020 email. “(Federal managers were) working closely with Canadian financial institutions to deliver these loans to qualifying businesses.”