CEBA Loan Repayments and Debt Forgiveness

Posted on September 21st, 2023 in Domestic Tax, General Business

****EXTENDED DEADLINES****

CEBA loans must be repaid by JANUARY 18, 2024 to be eligible for partial loan forgiveness.

For eligible CEBA borrowers in good standing, repaying the balance of the loan on or before January 18, 2024, will result in loan forgiveness of up to $20,000.

More specifically, where the outstanding principal other than the amount of potential loan forgiveness is repaid by January 18, 2024, the outstanding principal amount will be forgiven, provided no default under the loan has occurred.   

For example, if you borrowed $40,000 or less, repaying the outstanding balance of the loan (other than the amount available to be forgiven) on or before January 18, 2024, will result in loan forgiveness of 25% (up to a max of $10,000).

If you received a $40,000 loan and subsequently received the $20,000 expansion, repaying the outstanding balance of the loan (other than the amount available to be forgiven) on or before January 18, 2024, will result in loan forgiveness up to $20,000 based on a blended rate:

• 25% on the first $40,000; plus
• 50% on amounts above $40,000 and up to $60,000.

For loans outstanding on January 19, 2024, during the period of January 19, 2024 to December 31, 2026, you will be required to pay interest on your CEBA loan and be subject to the following repayment terms:

• 0% per annum interest until January 18, 2024.
• No principal repayment required before January 18, 2024.
• Automatic conversion to a three-year term loan beginning January 19, 2024.
• 5% per annum interest starting on January 19, 2024; interest payment frequency to be determined by your financial institution.
• Only interest payments are required to be paid on the term loan beginning January 19, 2024, however, the full principal is due on December 31, 2026.

CEBA loan holders who submit a refinancing application with their financial institution by January 18, 2024, may qualify for an extension of the partial loan forgiveness repayment deadline to March 28, 2024.

We suggest that you contact your financial institution to assist you with making a payment towards your CEBA loan or to submit a refinance application well in advance of the January 18, 2024, deadline.