On September 14, 2023, the Prime Minister announced extended deadlines for Canada Emergency Business Account (CEBA) loan repayments.
The repayment deadline for CEBA loans to qualify for partial loan forgiveness of up to 33% (either $10,000 loan forgiveness for a $40,000 loan or $20,000 loan forgiveness for a $60,000 loan) is being extended from December 31, 2023, to January 18, 2024. Loan holders who are looking to benefit from the loan forgiveness must repay by January 18, 2024, or make a refinancing application for an extension to repay until March 28, 2024. The deadline to apply for a refinancing application is also January 18, 2024.
On January 19, 2024, outstanding loans and loans refinanced for the March 28, 2024 extension will convert to three year term loans. These term loans will be subject to 5% interest per annum. The term loans must be repaid by December 31, 2026. This is extended from the original repayment date of December 31, 2025.
If an impacted business submits a refinancing loan application by January 18, 2024 but still requires a grace period to finalize the payout, the business can still qualify if the outstanding principal of the CEBA loan net of any potential debt forgiveness plus any applicable interest is repaid by March 28, 2024. It will be imperative that the applicable interest plus the net principal balance is paid by March 28, 2024 or the debt forgiveness portion of the loan could be jeopardized.
Impacted businesses are encouraged to reach out to their financial institutions who hold the CEBA loan to clarify the extension requirements and interest and principal repayments required by the deadlines.
The information in this article is of a general nature and is in summary form. Contact one of our tax professionals to discuss these matters in the context of your situation before acting upon such information.