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These loans were intended to help struggling businesses with cash flow, cash management, capital equipment, employment expenses, and other costs to allow them to continue to conduct business. Many of these expenses included non-deferrable expenses such as operating expenses, rent or lease payments, funding the payroll stream, property taxes, operating expenses, insurance-related costs, as well as other employment expenses and other debts.
Now that we are entering into 2024, these payments for eligible businesses are starting to become due. Specifically, these payments are due starting on January 18, 2024. However, the amount small businesses actually owe depends on whether they’ve made any payments and qualify for partial loan forgiveness.
Repayment and How it Works
Starting as of January 1, 2024, if you haven’t repaid your CEBA loan in full, then the financial institution you took the loan through will start to contact you for full repayment. That said, as of spring 2024, the Canada Revenue Agency will be taking over the collection of unpaid CEBA Loans for Canadian businesses.
While these loans were due by December 31, 2023, there are options if you’re unable to pay off the balance in full. If the balance isn’t paid, then the outstanding balance will be added to your account, and the CRA will work with you to create a repayment plan that works for you.
If you qualified for forgiveness repayments, then the payment date for the outstanding principal amount due was extended to January 18, 2024. For those who are unable to make these repayment terms work, then the amounts owing will be turned into a non-amortizing term loan. The due date for full repayment of this with the new loan terms is December 31, 2026.
This new loan structure is going to be different from your current CEBA loan since it was set up as a revolving line of credit. This will be closed and reorganized as a loan.
CEBA Loan Forgiveness
As we mentioned, the due date for loan forgiveness was extended until Jan 18, 2024. What exactly does this mean, though? Well, as long as you’re a CEBA loan holder in good standing and pay the designated amount of your CEBA loan by January 18, 2024, then you can get part of your loan forgiven. If you’re eligible for this, then you’ll be contacted by the financial institution through which you have the CEBA loan. However, some can also get a payment extension on partial forgiveness. That said, if your loan amount isn’t fully repaid by your due date, then you won’t qualify for your forgivable portion of the loan.
Loan Forgiveness Extension
For those who are in good standing and need a payment extension on the full repayment of the loan, you can apply for an extension with your financial institution. In order to get approval, you must apply before Jan 18, 2024. If you’re approved, then the repayment deadline will be extended until March 28, 2024.
That said, even if you’re approved for the extension, this doesn’t mean you can’t apply for financing with other lenders. You’re still able to. The extension until March 28, 2024, just gives you more time to figure things out.
Who To Contact Regarding CEBA Repayment for CEBA Loan Holders
If you have questions regarding your CEBA loans, you should refer to the financial institution that you took out the loan through. They’ll be able to help you with your CEBA loan balance. If that doesn’t work, then the next best step would be to contact the federal government. You can contact their CEBA call centre number at 1-888-324-4201. It’s available Monday through Friday from 9 am to 6 pm EST, but it is closed on statutory holidays. Remember, though, they will ask for the active CRA business number that you used to apply for the loan. This can be found on your income tax return.
How To Repay Your Loan
How you’re able to repay back your CEBA loan depends on the financial institution that you took out the loan with. Every financial institution will have a different process. Still, in most cases, you should be able to make your payments through online banking unless the loan is through another financial institution, not your main bank.
How It Works if Your Business Closed
Unfortunately, whether your business is closed or not, you still have to repay your CEBA loan. The financial institution that you hold the loan with will be able to make other arrangements and help you come up with a payment plan.
Interest on CEBA Repayments
When it comes to the terms of the loan and the repayment for the CEBA program, as long as you are approved for loan forgiveness, you don’t have to make any principal payments until January 18, 2024, when the entire loan needs to be paid. That said, any amounts that are unpaid as of January 19, 2024, will convert to a non-amortizing loan with repayments due in full on December 31, 2026.
Until January 18, 2024, the interest on CEBA amounts is 0% per annum. This, however, changes as of January 19, 2024. As of then, you pay interest that’s charged at 5% per annum, but the interest rate frequency is based on the financial institution you’re using.
Loan Forgiveness Terms
While we have mentioned loan forgiveness quite a few times, we haven’t gone over what it means exactly. Well, this means that if you’re approved for loan forgiveness and make the required payment by the due date, then you won’t have to pay that portion of the loan. This means that as long as you make the required payments by January 18, 2024, you can be forgiven 25% of your loan, up to a total of $10,000. If you can’t make the payments by then, you can apply for an extension with your institution, which will give you until March 28, 2024.
CEBA Expansion to $80,000
Currently, the CEBA funds only go up to $60,000 and are closed. They are no longer giving out CEBA loans, even to current recipients.
CEBA Loan Refinancing
Unfortunately, the time has passed to refinance your CEBA loan. The only refinancing option available is taking out a loan from another lender. You can then use this new loan to pay off your CEBA loan. This allows you to keep your CEBA loan forgiveness without having to front the funds right away.
Final Thoughts
The CEBA loan repayment date is approaching fast. Those who took out CEBA loans and meet the CEBA loan eligibility criteria for loan forgiveness only have until January 18, 2024, to make those payments. For others who weren’t approved, the repayments were due on December 31, 2023.
If you qualify for the loan forgiveness but need just a little more time, you can apply for an extension that will give you until March 28, 2024. That said, that extension has to be done by January 18 in order to qualify. If you’re still having a hard time making the payments, then it may be a good idea to apply for a personal loan. This way, you can still make your payments on time without having to come up with the funds on your own.
