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Meeting the new payment obligations will be a challenge for some, he said.

“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.”

The federal government provided up to $60,000 in interest-free loans to help businesses and non-profit organizations survive pandemic-related shutdowns and slowdowns.

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.

The CEBA repayment deadline was extended twice, as businesses dealing with inflation and a slowing economy struggled to come up with the cash, and expired on Jan. 18.

However, a special extension to March 28 was allowed for companiesto refinance their loans with a financial institution instead.

As Thursday approaches, Kelly said, some of his organization’s members are growing anxious.

“We’re starting to get a bunch of calls from business owners that are still facing a level of CEBA panic,” Kelly said.

According to the federal government’s estimates, more than 80 per cent of CEBA recipients have paid back their loan as of March 22 and benefited from partial loan forgiveness.

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.

“That should send an alarm bell to public policymakers,” he said, as many small-scale businesses are facing bankruptcies.

The Office of the Superintendent of Bankruptcy said last month that the number of insolvencies filed by Canadian companies in 2022 was up 37.2 per cent compared with 2021.

The small business association is calling on Ottawa to establish partial forgiveness for businesses in the next three years as they start repaying their principal amount.

It is also urging banks to be compassionate toward businesses as they seek refinancing.

This report by The Canadian Press was first published March 26, 2024.

Note to readers: This is a corrected story. A previous version incorrectly stated that 28 per cent of CEBA recipients have paid back their loan. In fact, the federal government estimates more than 80 per cent of recipients have paid back their loan as of March 22.