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The Canadian Emergency Business Account (CEBA) is a government relief program aimed at providing interest-free loans to Canadian small businesses to help cover operating costs during periods of reduced revenues due to the COVID-19 pandemic.
Repayment of your Canadian Emergency Business Account (CEBA) loan can usually be done through your financial institution where you initially received the loan. The process typically involves the following steps:
Remember, if your loan is fully repaid by the forgiveness date up to $20,000 of the loan will be forgiven.
Always consult with your financial institution or check the most recent guidelines provided by official government sources for the most accurate and current information.
If the Canadian Emergency Business Account (CEBA) loan isn’t repaid by the deadline provided in your repayment terms, the following might occur:
Loss of Forgiveness Benefit: Initially, CEBA loans have up to a $20,000 forgiveness benefit if repaid by January 18, 2024. If you don’t meet this deadline, you will lose this forgiveness benefit.
Interest Accrual: The CEBA loans are interest-free until December January 18, 2024. If the loan isn’t repaid by the deadline, interest starts accruing at 5% per year on the outstanding balance. The loan principal is payable by December 31, 2026.
Collections Process: If you can’t repay your CEBA loan, the government has announced that the Canada Revenue Agency (CRA) will be responsible for managing delinquent loans. This could involve entering a collections process and could potentially impact your credit score.
If you’re unable to repay your CEBA loan by the deadline, it’s best to reach out to your financial institution as soon as possible. They might be able to provide advice or options tailored to your situation.
You should contact your primary financial institution or visit the official CEBA website for the most current information.
Typically, you can only apply for one CEBA loan for each business number (BN) you have.
The loan itself is not taxable, but if a portion of the loan is forgiven, that amount is considered taxable income.
The CEBA loan is interest-free until January 18, 2024. If not repaid by January 18, 2024 and a loan application with your financial institution has not been submitted, an interest rate of 5% per year is payable monthly through to December 31, 2026.
Under the terms of the Canadian Emergency Business Account (CEBA) program, you are expected to repay the full amount of the loan. However, if the loan is repaid by January 18, 2024, a portion of it is forgiven.
For a $40,000 CEBA loan, if $30,000 is repaid by the deadline, $10,000 (or 25% of the loan) will be forgiven.
For a $60,000 CEBA loan, if $40,000 is repaid by the deadline, $20,000 (or 33% of the loan) will be forgiven.
If you do not meet the repayment deadline, you will be required to repay the full amount of the loan plus any accrued interest.
The non-forgivable portion of the loan must be repaid by January 18, 2024 to qualify for the forgiveness benefit.
However, if a loan application is made with the financial institution holding the CEBA loan, an extension to March 28, 2024 will be granted.
The original maturity date was December 31, 2022 to qualify for the forgiveness and the loan maturity date was December 31, 2025. However, now the maturity date to qualify for the forgiveness is January 18, 2024 and the loan maturity date has changed to December 31, 2026.
If your business is closing, you are typically still responsible for repaying your Canadian Emergency Business Account (CEBA) loan. The loan is not forgiven upon the closure of a business.
However, in the event of a business closure or bankruptcy, the conditions for the repayment of the loan, including the timing and interest, may be subject to specific legal provisions, bankruptcy laws, and the terms of the CEBA loan agreement.
This is a complex situation, and it’s important to consult with a financial advisor or legal professional who is familiar with these matters.