Briefing binder created for the Deputy Minister of Finance on the occasion of his appearance before the Standing Committee on Public Accounts on December 9, 2024 on the Auditor General of Canada's report 8, entitled “Canada Emergency Business Account” - part 8

CEBA Collections and Enforcement

Issue

Collections and enforcement efforts are ongoing. Overall, approximately 80% of CEBA loans were repaid by the January 18, 2024 deadline.

Key points

• CRA was assigned to assist EDC with CEBA collections. The CRA collections approach for CEBA loans will be consistent with the approach for other COVID-19 related emergency programs, such as the Canada Emergency Wage Subsidy. It will emphasize fairness, leniency, empathy and putting people first.
• As of November 19, 2024, approximately 70,000 CEBA loans (worth $3.4 billion of unpaid loans) have been assigned to the CRA for collection. 

Anticipated Questions and Answers

1. What happened to businesses that did not repay by the applicable deadline?

EDC is best placed to respond to this question.

(If pressed)

The loan holder has interest payment obligations, which accrues at 5%, and their principal is due December 31, 2026.

If the loan holder does not meet their interest payment obligations, the financial institution that issued the loan will undertake efforts at collection. If the loan holder has still not repaid, their loan will be assigned to the CRA for collection efforts.

The CRA will work with each business to determine its ability to repay, emphasizing fairness, empathy, and putting people first. The CRA will review the loan holder's circumstances on a case-by-case basis and may work with them to establish a payment arrangement or repayment plan tailored to their ability to repay.

2. How many CEBA loans are outstanding?

EDC is best placed to respond to this question.

(If pressed)

The vast majority of loans (over 80%) have been repaid.

Eligible loans that were not repaid (approximately 175,000 loans) by the forgiveness deadline converted to 3-year term loans at 5% interest rate.

There are currently around 70,000 loans assigned to the CRA as they are in default (e.g., the loan holders are not acquitting their monthly interest payments on their loans or ineligible loan holders that had to repay their full loan by December 31, 2023), representing $3.4 billion in unpaid CEBA loan debt. The CRA is in the beginning phase of collections efforts, and it is expected that the number of repaid loans and payment plans will increase over time. 

3. Were any CEBA loans referred to law enforcement for fraud?

EDC is best placed to respond to this question.

(If pressed)

468 loans were investigated from November 2020 to December 2023 where there was a suspicion that fraud or other illicit conduct may have occurred. A disclosure to the RCMP was made on August 4, 2022, related to 17 funded loans ($980,000). After disclosure, it is the responsibility of the RCMP to investigate and determine if charges should be laid.

Background

Overall Status of Repayments

As of November 19, 2024, of the $49 billion CEBA portfolio, $40.9 billion has been forgiven or repaid, $0.1 billion has been written off, and $8.1 billion remains outstanding. There are ~175,000 loans outstanding, of which ~41,000 (~$422 million) have been partially repaid.

Collections and Enforcement

In 2022, a Order in Council (OiC) assigned CRA responsibility for provision and administration of services to assist EDC in collecting CEBA loans. A federal statute of limitations of six years was introduced for CEBA to provide a consistent enforcement horizon across the country, just as is the case for Canada Student Loans. 

Following the 2022 decision to assign the post-FI collections responsibility to CRA, EDC finalized a Memorandum of Understanding (MOU) with CRA for collections actions for those businesses that will be in substantive arrears on interest payments and/or will not repay their loans by the deadline. EDC will reimburse CRA for costs incurred in providing the provisions and administration of collection services for the CEBA Program.

Eligible CEBA loans will generally default and become subject to collections efforts when loan holders default on interest payments between January 18, 2024, and December 31, 2026; or default on the loan principal after the deadline of December 31, 2026.

Ineligible CEBA loans became due, in full, on December 31, 2023. Outstanding ineligible loans are in default and are subject to collections efforts.

CRA collections approach for CEBA loans will be consistent with the approach for other COVID-19 related emergency programs, such as the Canada Emergency Wage Subsidy.

As of November 19, 2024, CRA has been assigned nearly 70,000 loans ($3.4 billion).