On September 14, 2023, the Prime Minister made a significant announcement regarding CEBA loans, offering vital support to small businesses and not-for-profit organizations.
Here are the key details:
1. Partial Loan Forgiveness – pay back $40,000 of the $60,000 borrowed
The repayment deadline for CEBA loans, allowing for partial loan forgiveness of up to 33 percent, has been extended. It was originally set for December 31, 2023, but now it’s extended to January 18, 2024.
2. Refinancing with Your Bank before January 18, 2024
For CEBA loan holders who submit a refinancing application with their original financial institution by January 18, 2024, there’s even more flexibility. The repayment deadline for partial loan forgiveness, with refinancing, has been extended until March 28, 2024. This extension offers additional time for businesses to hear back from their financial institutions on refinancing applications.
3. Pay back the full $60,000 via a Three-Year Term Loan
Starting on January 19, 2024, outstanding CEBA loans, including those covered by the refinancing extension, will automatically convert to three-year term loans. These loans will carry an interest rate of five percent per annum. The term loan repayment date has also been extended by an additional year, moving it from December 31, 2025, to December 31, 2026. This means that businesses that have not repaid or refinanced their loans will have access to a three-year, low-interest loan of up to $60,000. This extension offers relief to those who may be unable to secure refinancing or generate sufficient cashflow to meet the forgiveness deadline.
Repaying the loan on or before the new deadline of January 18, 2024 (or by March 28, 2024, if a refinancing application is submitted prior to January 18, 2024, with the original financial institution), will result in loan forgiveness. Specifically, businesses with a $40,000 loan will receive $10,000 in forgiveness, and those with a $60,000 loan will receive $20,000 in forgiveness.
This extension provides essential support to Canadian businesses and not-for-profit organizations, offering more time and flexibility to manage their CEBA loans. If you have questions or require more information, please reach out to your financial institution or visit the official CEBA website for guidance.