November 14, 2023

Canada Emergency Business Account: January 18, 2024 Repayment Deadline 

Background

The Canada Emergency Business Account (“CEBA”) is a program created by the Government of Canada during the pandemic to provide interest-free partially forgivable loans to qualifying businesses. 

Loans of up to $60,000 to small businesses and not-for-profits from financial institutions under the CEBA were available from April 9, 2020, to June 30, 2021. The initial terms of the CEBA program required the loans to be repaid by December 31, 2022 but that repayment deadline was subsequently extended to December 31, 2023 (see our newsletters from 2020 and 2021 here https://www.dhgroup.ca/2020/04/08/canada-emergency-business-account/ and here:https://www.dhgroup.ca/2021/02/09/update-covid-19-relief-programs/). Under the terms of the program, repaying the balance of the loan (net of the forgiven amount) on or before December 31, 2023 would result in loan forgiveness of up to 33 percent (up to $20,000).

Extended Repayment Deadline

On September 14, 2023, the Government of Canada announced further extensions of the deadline for CEBA loan repayments. 

  • The loan repayment deadline to qualify for partial loan forgiveness has now been extended to January 18, 2024. 
  • The deadline to repay and qualify for loan forgiveness is further extended to March 28, 2024 for those who make a refinancing application with the financial institution that provided their CEBA loan before January 18, 2024.

Outstanding CEBA loans that have not been repaid (and do not have an accepted refinancing arrangement) as of January 19, 2024 are not eligible for any loan forgiveness and will convert to three-year term loans, subject to interest rate of five percent per annum. The repayment deadline of these term loans, including any unpaid accrued interest and principal amount, will be extended from December 31, 2025 to December 31, 2026. 

If you have a balance owing under the CEBA program, we recommend that you make arrangements to repay the loan balance, net of the forgivable amount, before January 18, 2024. 

If you are eligible, the forgiven portion of the loan will be:

  • 25% of the borrowed amount if you borrowed $40,000 or less (e.g., $10,000 if you borrowed $40,000); or  
  • 25% on the first $40,000 and 50% of the remainder if you borrowed over $40,000 (e.g., $20,000 if you borrowed $60,000).

For example, if your business borrowed: 

  • $40,000 under the CEBA, you must repay $30,000 ($40,000 less $10,000 forgiven) on or before January 18, 2024 to be eligible for the forgiveness; or
  • $60,000 under the CEBA, you must repay $40,000 ($60,000 less $20,000 forgiven) on or before January 18, 2024 to be eligible for the forgiveness.

It would be prudent to repay the required amount before January 18, 2024 to ensure that you don’t miss this important deadline. 

Extension to March 18, 2024 Under Qualifying Refinancing Extension

If you cannot repay your CEBA loan in full before January 18, 2024 then you should consider making a refinancing application to the financial institution that provided your CEBA loan. This application for a new loan must be submitted before the January 18, 2024 deadline. 

If your CEBA lender financial institution accepts your refinancing application and you repay the CEBA loan (using the refinancing loan proceeds) after January 18, 2024, then interest at a rate of 5% per annum will accrue from January 19, 2024 until you make the CEBA loan repayment.  

You can still qualify for partial loan forgiveness as explained above if the CEBA loan (less the amount to be forgiven) is repaid using the refinancing and the interest (which starts to accrue on January 19, 2024) is paid in full by March 18, 2024. 

For more information, see the federal government’s news release and CEBA overview:

Please contact your D&H Group LLP advisor if you have any questions. 

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