The government is extending the CEBA repayment deadline by one year
The past couple of years have been nothing short of a roller coaster for small businesses, including those in the beauty industry. The pandemic forced many to close or limit their operations, but government relief programs like the Canada Emergency Business Account (CEBA) offered a lifeline. Now, there’s an update on the program that could affect your salon, spa, or barbershop.
New – Check our update on the how you can work with your bank to get the extension to March.
TL;DR: Updated CEBA Loan Repayment Terms
📢 What’s New? The Canadian government has made some adjustments to the CEBA loan program to give small businesses more flexibility for repayments. Here are the key takeaways:
📆 New Deadlines
- Partial loan forgiveness deadline: Extended from December 31, 2023, to January 18, 2024.
- Refinancing extension: Until March 28, 2024, for those who apply by January 18, 2024.
- Final repayment date: Extended from December 31, 2025, to December 31, 2026.
💰 Loan Forgiveness
- Repay by the new deadlines to get up to 33% of the loan forgiven. That’s $10,000 off a $40,000 loan and $20,000 off a $60,000 loan.
- You now have more time to hear back from your bank on refinancing applications, giving you a better chance to benefit from partial loan forgiveness.
📈 What Happens if You Don’t Repay in Time?
- As of January 19, 2024, any remaining loan converts to a three-year term loan with a 5% annual interest rate.
📞 Who Will Contact You?
- Financial institutions will reach out to CEBA loan holders directly regarding these changes.
These updates also apply to CEBA-equivalent lending through the Regional Relief and Recovery Fund.
What’s the Update?
Prime Minister Justin Trudeau announced that the government is extending the CEBA repayment deadline by one year. Originally, businesses had until the end of 2022 to repay the loan and qualify for debt forgiveness on a portion of it. This deadline was later extended to the end of 2023 and has now been further extended to the end of 2026. Businesses will be given a small extension—until January 18, 2024—to qualify for debt forgiveness. Those who refinanced their loans will have until March 28 to qualify.
While the extension is beneficial, it’s essential to note that the forgivable portion of the loan will still be lost if not repaid by these new deadlines. After January 19, 2024, any remaining loan amount will start accruing a five percent interest.
BeautyCouncil’s Strong Advocacy
This extension didn’t happen in a vacuum. The BeautyCouncil, representing salons, spas, and barbershops, engaged members to passionately petition the government for this change. The council believes that while this isn’t a total forgiveness, it’s a good compromise given the current economic landscape.
What This Means for Your Business
The extension provides a “bit more runway,” as Trudeau put it, especially for businesses that have yet to recover fully from the pandemic’s impact. It’s additional time to stabilize operations, generate revenue, and prepare for repayment without the immediate pressure of a looming deadline.
However, it’s crucial to strategize for repayment to take advantage of the debt forgiveness part of the loan. Remember, if you miss the new deadlines, you’ll have to repay the entire loan amount by the end of 2026, with interest starting to accrue from January 19, 2024.
While this update provides some breathing room, it’s essential to keep an eye on your finances and plan accordingly. Utilize this extension wisely—whether that means investing in new services, optimizing operational efficiency, or bolstering your marketing efforts.
In the ever-changing world of small business management, especially in an industry as dynamic as beauty, staying informed and adaptable is key. And rest assured, the BeautyCouncil will continue to advocate for the interests and well-being of its members in these challenging times.
Whether you’re a salon owner, a spa manager, or an individual chair renter, the CEBA repayment extension is significant news that could impact your financial planning. Make sure to consult financial advisors and use this extra time wisely to position your business for long-term success.