We have an important update to our previous story on the Canada Emergency Business Account (CEBA) loan program.
The Latest News
The Big Six Canadian banks have announced they’re open to refinancing CEBA loans for small businesses, although they’ve provided few specifics. Refinancing terms will be decided on a case-by-case basis, so you’ll need to consult with your financial institution for details.
What This Means for You
Ottawa recently extended the repayment deadline to January 18, 2024, for partial loan forgiveness—either $10,000 or $20,000 depending on your loan size. After this date, interest will start accruing at 5% per year, and the full loan amount will be due by December 31, 2026.
New Refinancing Deadline: If you’ve been in talks with your bank about refinancing your CEBA loan, you now have until March 28, 2024, to finalize an agreement and still qualify for partial loan forgiveness.
Points to Consider
Refinancing could be a beneficial strategy if you can’t repay the full loan by the new January 2024 deadline but still wish to benefit from partial forgiveness. The trade-off involves choosing between a larger loan at a 5% interest rate or a smaller loan at a potentially higher rate.
This update comes after months of advocacy from business groups, including our own efforts at the BeautyCouncil, arguing that many small businesses have yet to recover financially from the pandemic.
We encourage you to discuss your specific situation with your bank to explore the best path forward for your business. Some alternative lenders are also offering CEBA refinancing programs, but be cautious as these may come with higher interest rates.
Stay tuned for more updates, and as always, manage your finances wisely.