The Canada Emergency Business Account (CEBA) loan repayment and forgiveness deadline is tomorrow: Thursday, January 18th, 2024. Barring a further extension by the federal government—which is highly unlikely—borrowers who were eligible for the previous CEBA repayment extension must repay their outstanding balances to qualify for partial loan forgiveness of as much as 33 per cent.
Loan holders that submit a loan refinancing application prior to Thursday will have until March 28th, 2024, to repay any outstanding principal—minus the amount of potential debt forgiveness—and still qualify for loan forgiveness of $10,000 on $40,000 loans and $20,000 on $60,000 loans.
As we outlined in a recent blog, a loan outstanding after Thursday’s deadline will covert to a three-year term loan. Outstanding balances will be subject to interest rates of 5 per cent per annum. The term loan repayment deadline will be December 31st, 2026, but borrowers in this category will only be required to make interest payments until that deadline. They will no longer qualify for partial loan forgiveness.
Some borrowers did not qualify for the extended payment terms and were required to repay their outstanding CEBA balance in full by December 31st, 2023. Unpaid loans in this category will now be assigned to the government CEBA Program for collection. However, some flexibility may still be on offer. According to the CEBA website:
“… if you are unable to repay by the provided deadline, the CEBA Program will review your circumstances on a case-by-case basis and work with you to establish a payment arrangement/repayment plan tailored to your ability to repay.”
In the lead-up to this week, small business advocacy groups had been calling on Ottawa to again extend the CEBA repayment deadline and loan forgiveness eligibility. Their requests have been largely ignored as the federal government seeks to recoup funding provided through the pandemic support program, which was designed to help businesses survive extended lockdown periods.
The CEBA program offered interest-free loans of as much as $60,000 to qualifying businesses and not-for-profit organizations to help cover operating expenses. The government estimates that $49.2 billion in funding was approved for CEBA loans and expansions.
If you have questions about the Canada Emergency Business Account loan repayment deadline and loan forgiveness rules, contact a member of our team.
Armando Iannuzzi, Co-Managing Partner