Businesses that took on Canada Emergency Bank Account (CEBA) loans during the pandemic should be planning ahead to meet the loan repayment deadline of December 31st, 2023 in order to benefit from the forgivable portion of the loan. Any business that took out the full $60,000 loan is only required to repay $40,000, so long as the amount is paid prior to the year-end deadline. Businesses that fail to meet the deadline will be required to repay the entire loan. Interest at 5% will be added to all outstanding loans starting January 1, 2024. The final deadline for repayment of the full loan will be December 31, 2025.
CEBA loans were offered as a financial lifeline to businesses suffering from lockdowns in two phases. In phase 1, interest free loans of up to $40,000 were made available, of which only $30,000 had to be repaid if the repayment deadline of December 31, 2023 was met. Failure to meet the deadline would require the business to repay the full $40,000 and pay interest of 5% on the outstanding balance starting January 1, 2024.
Phase 2 of CEBA provided an additional interest free loan of $20,000 with the same terms: repay $10,000 by December 31, 2023 or repay $20,000 and begin being charged interest if the deadline is not met.
Business owners should be planning for the loan repayment now to ensure the funds are available to meet the deadline later this year. Business owners who anticipate being unable to repay the loan by year-end should consider approaching potential lenders now in order to secure funding and avoid having to repay the full amount of the loan.
