Prime Minister Justin Trudeau says the government is extending the repayment deadline for its small business pandemic loan program by one year — but businesses will still lose the forgivable portion of the loan if they don’t repay in the coming months.

The Canada Emergency Business Account (CEBA) was introduced at the height of the pandemic to help out small businesses forced to close or limit their operations due to public health measures. The program offered interest-free loans backed by the federal government.

A business could apply for up to $60,000 through the program — up to $20,000 would be forgiven if the rest was repaid by a certain deadline. The original repayment deadline was the end of 2022. It was later extended to the end of 2023.

Any business that missed that deadline would start accruing interest and have to repay the loan in full by the end of 2025. That deadline will now be extended to the end of 2026.

“While many have paid these loans back, we know that some need a bit more runway,” Trudeau said Thursday.

A government spokesperson told CBC on background that businesses will be given a small extension — until Jan. 18, 2024 — to qualify for debt forgiveness. Interest will still accrue if this deadline is missed.

Nearly 900,000 businesses were approved for the program, which distributed just over $49 billion in loans. But only 21 per cent of those businesses had fully repaid their loans as of May 31.

The federal government has been under immense pressure from a number of business advocacy groups to extend the deadline past 2023. Others have been calling for complete forgiveness of the outstanding loans.

The Canadian Federation of Independent Business said it is disappointed with the government’s announcement.

“The government has failed to address the most critical issue on outstanding CEBA loans — the loss of the $20,000 forgivable portion for those unable to repay the loans by year end,” CFIB president Dan Kelly said in a statement.

“The extension of the forgivable deadline by a few weeks will be of very little value to the thousands of small business owners who just don’t have money to repay now.”