A report from Canada’s Auditor General Karen Hogan tabled on Monday in the House of Commons concludes that while the Canada Emergency Business Account (CEBA) program worked to quickly provide Canadian small businesses with loans during the COVID‑19 pandemic, overall, the program was not managed with due regard for value for money.
Export Development Canada (EDC), as the Crown corporation responsible for delivering the CEBA program, acted quickly to disburse $49.1 billion in loans to approximately 898,000 small businesses across Canada. The loans were to cover unavoidable expenses during the COVID‑19 pandemic, such as payroll, rent, and insurance. The audit found that 91% of loans went to eligible businesses.
As of March 31, 2024, 83% of the loan amounts originally disbursed were repaid with partial forgiveness. This leaves some $8.5 billion to be repaid. The audit also found that EDC’s plan to collect defaulted loans lacked key elements, while the Canada Revenue Agency, which is supporting EDC in collection efforts, had a more detailed plan but was missing targeted timelines.
Furthermore, the audit found significant weaknesses in EDC’s contract management. The corporation relied on a single vendor—Accenture—to deliver the program, using a series of non‑competitive contracts representing 92% of the $342‑million value of contracts awarded for this program. EDC gave too much control to the vendor over key aspects of contracts, such as the scope of work and pricing, and failed to exercise basic controls in contract management, such as monitoring that amounts paid aligned with the work performed. As a result, value for money was compromised.
The audit also found that the Department of Finance Canada and Global Affairs Canada did not effectively oversee the CEBA program. As a result of unclear roles and responsibilities, neither department took accountability for the program, leaving many basic program elements, such as lifecycle planning, either delayed or incomplete. Also, the Department of Finance Canada did not set a limit on EDC’s administrative spending, which went unchallenged.
“Unlike other COVID‑19 programs, CEBA is a loan program with repayments that will be ongoing for several years while action on defaulted loans is just beginning,” said Hogan. “Value for money will be further compromised without better monitoring and improved plans to recover defaulted loans.”
CHRYSTIA Freeland, Deputy Prime Minister and Minister of Finance, and Rechie Valdez, Minister of Small Business, on behalf of the partners in the CEBA program — the Department of Finance Canada, Canada Revenue Agency and Global Affairs Canada — said in a statement: “The Canada Emergency Business Account was a critical lifeline for nearly a million Canadian small businesses in the worst moments of the pandemic.
“CEBA saved businesses from bankruptcy in the face of lockdowns and economic uncertainty. CEBA protected workers who otherwise would have been laid off and left without an income for an indefinite period of time.
“Together, we were able to offer $60,000 partially forgivable loans to small business owners in communities across our country. Restaurants, local grocery stores, farmers, hair and nail salons, cafes, and corner stores. These businesses are back on their feet today because of CEBA.
“While the Auditor General offers some good and useful recommendations, this report fails to properly acknowledge that CEBA was designed and delivered during a global pandemic. Within less than two weeks, the federal government stood up new, emergency support for 898,000 small businesses across the country. This was a historic, national effort, at a time of crisis, to support our small business owners and their employees.
“Our government is proud to have extended this lifeline to so many of our country’s hardworking small business owners and operators. They are the lifeblood of communities, large and small. These small businesses deserved our support in the depths of the pandemic and they deserve our support today.”
