Name: Sahil Markanda

Student ID: A00181886

Course name: MGT110 (Current Issues in Business - Seminar I)
Submitted To: Prof. Atashi Bedi
Assignment Topic: Businesses need to pay CEBA loans or lose free money — because the
deadline isn't changing.
 Introduction:
This News article from CBC News of January 17, 2024, by the Author Anis Heydari (Senior
Reporter) discusses the end of Canada's Emergency Business Account program and how it impacts
businesses. The government is not extending the repayment deadline, which signals a shift away from
emergency aid to more regular economic practices. The analysis examines economic trends, policy
changes, technological impacts, and worldwide factors that are necessary to understand the progress in
COVID-19's recovery. Before starting further, let me clear that the Canada Emergency Business Account
(CEBA) was a government program designed to provide financial support to businesses in Canada during
the COVID-19 pandemic.
Economic Trends: The article focuses on economic trends, where more than 885,000 small businesses
have taken out over $48 billion of interest-free credit from the CEBA. The government's refusal to extend
the repayment deadline is indicative of a shift from emergency aid to more common business practices
that are already taking place globally.
Policy Changes: The government's decision not to extend the repayment deadline for CEBA loans until
January 18 is a major policy shift. Justin Trudeau, the prime minister of Canada, says that it's time to get
rid of Pandemic Programmes and encourage businesses to change their attitude.
Technological Advancements: The article, although not explicitly discussed, suggests that technology is
advancing. Fintech companies helping with loan refinancing show how technology is shaping financial
solutions for businesses facing economic challenges.
Global Events: This article provides insight into Canada's economic decisions worldwide in the context of
a recovery from anemic conditions. The end of the CEBA program is in line with a global trend to rethink
economic measures.
Summary of Key Points:
1. CEBA Loan Repayment Deadline: The article draws attention to the Canadian government's
decision not to renew a CEBA loan repayment deadline, as it emphasizes the need for
completing pandemic funding programs.
2. Impact on Businesses: More than $48 billion of CEBA loans have been granted to more than
885,000 small businesses and not-for-profit organizations. Failure to pay on time incurs interest,
while a timely payment may lead to loan forgiveness of up to $20,000.
3. Diverse Business Perspectives: Businesses such as Guardsman Insurance Services are frustrated
by requests for forgiveness, and feel it is unfair. Different cost pressures for different types of
business are acknowledged in a nuanced view.
4. Government Financial Burden: The federal government could be on the hook for $897 million in
delayed payments. The role of financial institutions was to manage the loan, and further delays
could result in lost interest payments or potential uncollectable loans.
5. Options for Businesses: A 5% interest rate, refinancing with financial institutions, or exploring
options from Fintech companies such as Merchant Growth offering the possibility of loan
forgiveness is an alternative to businesses that are unable to pay by the deadline.
6. Entrepreneurial Impact: An owner's narrative Brittany Megna provides a concrete example of
the effect on business owners, demonstrating how the CEBA loan exacerbates corporate
insolvency and results in lease violations.
Potential Impact on Business Environment:
Market Dynamics: Market dynamics, affecting the financial health of businesses and potentially leading
to market exits or shifts in competition, may be affected by the firm repayment deadline.
1. Consumer Behavior: Consumer-focused firms may be negatively impacted by difficulties in
renewing and repaying CEBA loans, which could change consumer behavior as these businesses
decide whether to close, downsize, or restructure.
2. Industry Regulations: As businesses adapt to changing regulatory environments, the
government's decision marks a shift in economic policy that could influence future industry
legislation.
3. Financial Technology Adoption: The potential for a rise in the adoption of financial technology
solutions to support economic recovery is indicated by companies offering refinancing options,
which contribute to the development of financial technology.
Critical Analysis of Potential Consequences on Businesses:
1. Short-Term Impacts:
 Financial Strain on Businesses: In the short term, financial pressure may be immediate and
could affect liquidity and cash flow for undertakings facing difficulties in meeting CEBA's
repayment schedule.
 Market Volatility: Short-term volatility, affecting investor confidence and potentially leading to
stock price fluctuations, could occur in sectors dependent on CEBA funds.
 Consumer Confidence: Businesses in difficulty with repayments may make operational changes,
affecting consumer-related industries and potentially reducing expenditure.
 Sectoral Variations: Different sectors will experience different degrees of impact, with service-
oriented companies facing more immediate challenges compared to technology-driven
industries.

2. Long-Term Impacts:
 Business Viability and Closures: Long-term consequences, such as business closures and
determining the viability of businesses, could result from an inability to pay CEBA loans.
 Industry Evolution: The evolution of the industry, as businesses adapt to new economic
conditions and innovative sectors grow increasingly strong, may also have a longer-term impact.
 Creditworthiness and Access to Capital: A long-term impact on creditworthiness, affecting
future financing or access to capital, may be experienced by struggling businesses.
 Employment Landscape: Employment losses and changes in the labor market may occur
because of prolonged financial difficulties, contributing to increased unemployment rates.

3. Sectoral Considerations:
 Service and Hospitality: Prolonged difficulties, which could lead to the closure of sectors
dependent on CEBA loans during pandemic restrictions, are likely to be encountered by these
sectors.
 Technology and E-Commerce: Technology sectors that have responded well to digital trends can,
over time, enjoy positive lasting results.
 Financial Services: Short-term economic impacts may be felt by the institutions that administer
CEBA loans, but in the longer term they can benefit from economic stabilization.
 Retail and Consumer Goods: Changes in consumer spending patterns and adapting to new
preferences and market dynamics may occur in the retail and consumer goods sector.
 Reference
Heydari, A. (2024, January 18). Businesses need to pay CEBA loans or lose free money — because the
deadline isn’t changing. CBC. https://www.cbc.ca/news/business/ceba-loan-not-extended-
1.7085696

Isabelle, D. A., Han, Y., & Westerlund, M. (2022). An analysis of the impact of the COVID-19 pandemic
on CEBA small business owners and the implications for Canadian government policy responses.
Canadian Public Policy and CEBA, 48(2), 322-342.

CEBA Loan Forgiveness: Consequences. (n.d.). Walters-Luker, Inc. obtained on January 28, 2024, from
https://www.wolterskluwer.com/en-ca/expert-insights/implications-of-ceba-loan-forgiveness
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Godbout, L., Gagné-Dubé, T., Gosselin, J. S., and St-Cerny, S. (2020). This paper examines the economic
response of Canadian governments to COVID-19 during the initial three months of the CEBA
crisis. Tax J. Can., 68, 863.

Mailhot, G., Mezhoud, J., Ogereau, F., Claude, A., and Sarramia, D. (2022). CEBA: An Environmental
Monitoring and Data Sharing Data Lake. Basel, Switzerland: Sensors, 22(7), 2733-.
https://doi.org/10.3390/s22072733

Rumanek, J. (2023, December 20). CEBA Loans: The Canadian business owner's perspective. Rumanek
& Company Ltd. https://www.rumanek.com/ceba-loans-insights-for-canadian-business-owners/