Many businesses took private bank loans with high interest rates to pay back enough of their Canada Emergency Business Account loans to qualify for partial loan forgiveness, CFIB president Dan Kelly said Tuesday."This has caused a real constraint on businesses," Kelly said in an interview."They do so, in so many ways, with a gun to their head because they had no choice in order to access that forgivable portion.
Businesses that paid off the required portion of their loan by the repayment deadline were eligible to have the remainder forgiven. Those that missed the deadline lost out on the forgivable portion and saw their debt converted to a three-year loan with interest of five per cent annually. However, a special extension to March 28 was allowed for companiesto refinance their loans with a financial institution instead."We're starting to get a bunch of calls from business owners that are still facing a level of CEBA panic," Kelly said.
Kelly speculated business owners on the verge of defaulting are likely to pay just the interest and not be able to keep up with their obligations.
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