The Canada Emergency Business Account (CEBA) loan is a financial support initiative launched by the Canadian government in response to the COVID-19 pandemic. It aimed to help small businesses and not-for-profits by providing interest-free loans. These loans were designed to assist with operating costs that could not be deferred, such as payroll, rent, utilities, insurance, property tax, or debt service.
CEBA Loan Repayment Date
The CEBA loan repayment date is the deadline by which borrowers need to repay their loan to benefit from the loan forgiveness aspect of the program. The initial repayment deadline was December 31, 2022, but it was extended. For loan holders who meet the eligibility criteria and are in good standing, the forgiveness repayment date is extended to January 18, 2024.
Before January 18, 2024: Grace Period for Repayment and Forgiveness Eligibility
- Interest Rate and Principal Repayments: During this period, the CEBA loan carries a 0% interest rate, and no principal repayments are required.
- Opportunity for Forgiveness: Borrowers can make payments towards their loans to qualify for loan forgiveness. The amount paid will determine how much the loan can be forgiven, up to 33 percent or $20,000.
On January 18, 2024: Final Deadline for Forgiveness Eligibility
This date marks the end of the grace period and is the last opportunity for borrowers to repay the required amount to qualify for loan forgiveness.
Starting January 19, 2024: Conversion to a Term Loan
- Change in Loan Terms: Any remaining balance on the CEBA loan will convert into a 2-year term loan.
- Interest Rate Adjustment: The interest rate on this term loan will be set at 5%, and regular repayments will become necessary.
By December 31, 2025: Final Repayment Deadline
Complete Loan Repayment Required: Borrowers must fully repay their CEBA loan by this final deadline. Failure to do so can result in additional financial implications based on the loan terms.
How CEBA Loan Forgiveness Works
CEBA loan forgiveness works by forgiving a portion of the loan if repaid by a specific date. This incentive encourages timely repayment and offers financial relief to qualifying businesses.
- Scope of Loans Offered: The CEBA program offered interest-free loans of up to $60,000 to small businesses and not-for-profits, supporting a wide range of organizations affected by the COVID-19 pandemic.
- Availability Across Financial Institutions: These loans were accessible through more than 220 financial institutions nationwide, making the program broadly available to eligible businesses and organizations.
Expansion and Increase of Loan Amount
- Expanded Eligibility as of October 26, 2020: The program expanded its eligibility by removing the condition requiring an active business chequing/operating account as of March 1, 2020. This allowed more businesses to apply after establishing a chequing/operating account with their primary financial institution.
- Increase in Loan Amount: As of December 4, 2020, the maximum CEBA loan amount was increased to $60,000. Those who had received the $40,000 CEBA loan were eligible to apply for an additional $20,000.
Closure of the Application Period
The application period for the CEBA Program closed on June 30, 2021, marking the end of new applications and funding disbursements. The validation of eligibility criteria for all CEBA loan holders has been completed, and the results are final.
Amount of CEBA Loan Forgiveness
Under the CEBA program, up to 33% of the loan can be forgiven. For instance, if a business receives the maximum loan of $60,000 and meets the criteria for forgiveness, up to $20,000 can be forgiven.
Forgiveness Terms
The key term for loan forgiveness under CEBA is the repayment of the loan balance on or before the specified deadline. A portion of the loan will be forgiven for eligible borrowers who repay their loan by January 18, 2024. If the loan is not repaid by this date, the remaining balance will convert to a term loan with interest.
Checking Your Loan Balance
To check your CEBA loan balance, you should access your online banking platform where the loan was administered. Most financial institutions provide detailed information about loan balances and transaction histories through online services. Alternatively, you can contact your bank directly for this information.
Tax Implications of CEBA Loan Forgiveness
The forgiven portion of the CEBA loan is generally considered taxable income. This means that the amount of the loan that is forgiven should be reported as income in the tax year that it is forgiven. Borrowers should prepare for the tax implications and may want to consult a tax professional for guidance.