CEBA repayment deadline approaching — January 18, 2024

Businesses must repay their CEBA loan by January 18, 2024, to be eligible for the forgivable portion of the loan. This is less than one week away – contact your financial institution to explore the options available to you.

The Canada Emergency Business Account (“CEBA”) program offered interest-free loans of up to $60,000 to small businesses and not-for-profits. CEBA loans were available from more than 220 financial institutions, backed by the Government of Canada. For eligible CEBA loan holders in good in good standing[1], repaying the balance of the loan on or before January 18, 2024 will result in loan forgiveness of up to 33 percent (up to $20,000).

Following many conversations with the government, we believe a further extension is unlikely, and businesses that have the capacity to repay should do so in advance of the deadline to ensure they are taking advantage of the loan forgiveness.

If you do not have capacity to repay the loan, consider borrowing to repay the loan before the deadline. To be in good standing, you need to apply for refinancing before January 18, 2024, to qualify for a special refinancing extension to March 28, 2024, some important details:

  • There is no standardized documentation requirement to prove you’ve applied for refinancing before the deadline, each bank will determine its own process;
  • You do not need to refinance the loan with your existing bank – so ensure you’re shopping around for the best rate;
  • If you’re rejected for refinancing, you will still qualify for the extension to March 28, 2024, as long as you’re in good standing; and
  • 5% interest will be charged during the extension period.

If you remain eligible but are one of the 200,000 small business owners who are not able to repay – you will lose the forgivable portion, and will have three years, until the end of 2026 at 5% interest until the loan is repaid in full.

We advise all clients who have taken advantage of the CEBA loan to contact your financial institution to explore the options available.

K&P CPAs is here to assist you in navigating these deadlines and ensuring a smooth repayment process. Feel free to reach out if you have been impacted by CEBA or require guidance on meeting your obligations.

[1] The Government of Canada has commented that to be in “good standing”, the eligibility criteria was evaluated by the Canada Revenue Agency, if your business has been deemed ineligible, you must repay the full amount. If you are unsure as to why you are ineligible, please call the Canada Emergency Business Account call centre at 1-888-324-4201, and your financial institution to get clarity.

Disclaimer

Our disclaimer, which can be accessed at https://kpcpa.ca/disclaimer/, forms an integral part of and must be read in conjunction with, this guide.