Prime Minister Announces Extended Deadlines for CEBA Loan Repayments
Key Highlights:
- Extended Repayment Deadline: The Canadian government has just announced an extension to the Canada Emergency Business Account (CEBA) loan repayment deadlines. The new deadline for repayment to qualify for partial loan forgiveness of up to 33% is now January 18, 2024, instead of December 31, 2023.
- Refinancing Flexibility: For businesses that applied for refinancing through the same financial institution that provided their CEBA loan before January 18, 2024, the deadline has been extended to March 28, 2024. This additional time is designed to give businesses a better chance to access relief and hear back about their refinancing applications.
- Conversion to Term Loans: From January 19, 2024, any outstanding loans, including those under refinancing, will turn into three-year term loans with a five percent annual interest rate. The term loan repayment will be interest payments $167/month with the principle due on December 31, 2026.
- Loan Forgiveness Details: Repayment made by the new deadlines will result in significant loan forgiveness – $10,000 for a $40,000 loan and $20,000 for a $60,000 loan.
Real-World Impact:
- Sarah and Nick’s Scenario: Struggling to repay their $40,000 CEBA loan, Sarah and Nick will now have their loan converted into a three-year term loan from January 19, 2024, making manageable monthly interest payments of $167 until December 31, 2026, when the full principal will be due.
- Doug’s Opportunity: Doug, applied for $40,000 in financing from the bank that provided his CEBA loan to pay off his $60,000 CEBA loan. He will not hear from the bank regarding the refinancing by January 18, 2024. He will now benefit from the extended deadline of March 28, 2024, to secure financing and still be eligible for the $20,000 loan forgiveness on his $60,000 loan.
Note to Loan Holders:
Financial institutions will directly contact CEBA loan holders about these updates. Additionally, these changes are also applicable to CEBA-equivalent lending through the Regional Relief and Recovery Fund.
Stay Informed & Prepared:
It’s crucial for businesses to stay informed about these changes and plan accordingly. If you have any questions or need assistance, feel free to reach out to your financial advisor or the financial institution that provided your CEBA loan.
Please note that this newsletter is intended for informational purposes only and should not be taken as financial or legal advice.