CEBA Loan Repayment Deadline Extended to December 31, 2023

Did your business apply for a Canada Emergency Business Account (CEBA) loan? Are you confused about the scope of your loan repayment and forgiveness? Cross & Company is here to help.

The Canada Emergency Business Account (CEBA) program offered interest-free loans between $40,000 and $60,000 to small businesses and not-for-profits to help them navigate and remain resilient during the pandemic. Opened for applications until June 30, 2021, the program has provided more than $49 billion in liquidity to over 898,000 Canadian businesses.

Due to the Omicron surge, the Government of Canada announced that the repayment deadline for CEBA loans to qualify for partial loan forgiveness is being extended from December 31, 2022, to December 31, 2023, for all eligible borrowers in good standing. Repayment on or before the new deadline of December 31, 2023, will result in loan forgiveness of up to a third of the value of the loans (meaning up to $20,000).

Outstanding loans would subsequently convert to two-year term loans with interest of 5 percent per annum commencing on January 1, 2024, with the loans fully due by December 31, 2025.

Commonly Asked Questions & Answers:

Interest:

• 0% per annum interest until December 31, 2023
• 5% per annum interest starting on January 1, 2024; interest payment frequency to be determined by your financial institution

Repayments & Maturity:

• No principal repayment is required before December 31, 2023
• If the loan remains outstanding after December 31, 2023, only interest payments are required until the full principal is due on December 31, 2025

Debt Forgiveness:

• If the outstanding principal, other than the amount of potential debt forgiveness, is repaid by December 31, 2023, the remaining principal amount will be forgiven, provided that no default under the loan has occurred

Am I eligible for the December 31, 2023 loan repayment extension?

Borrowers that met CEBA eligibility criteria and are in good standing are eligible for the December 31, 2023 loan repayment extension. If you qualify for the new extended term, your financial institution will contact you and provide details regarding the new repayment date.

CEBA eligibility criteria validations have been completed for all borrowers and the results of these validations are final. These validations were conducted in partnership with the Canada Revenue Agency (CRA) and revalidated periodically since the launch of CEBA in April 2020 to ensure an accurate reflection of the information in CRA records.

Who can I contact if I have questions about my repayment requirements?

For questions about your specific loan details (i.e., the loan balance, the outstanding amount that must be repaid, acceptable methods of repayment, and terms of the loan) please contact your financial institution.

How can I determine the balance of my loan?

Contact your financial institution for details regarding the balance of your CEBA loan.

What happens if I cannot repay my loan by the deadline provided in my repayment terms?

Borrowers that are not in good standing are in default on their CEBA loan. If this situation applies to you and you do not repay your loan by the deadline provided in the repayment terms provided by your financial institution, you will be contacted by your financial institution regarding the next steps. Additionally, depending on the reason that your loan is not in good standing, you may not be entitled to receive loan forgiveness.

For borrowers that met CEBA eligibility criteria and are in good standing, if you do not repay your loan by December 31, 2023, you will not receive forgiveness. During the period of January 1, 2024, to December 31, 2025, you will be required to pay interest on your CEBA loan. For any additional information regarding interest applicable to your CEBA loan, please contact your financial institution.

Does CEBA loan forgiveness need to be reported in my income tax filing? If so, when?

The forgiveness portion of your CEBA loan is taxable. For any other taxation questions relating to your CEBA loan, please contact the Canada Revenue Agency (CRA) or our accountants at Cross & Company for further information.

How Cross & Company Can Help

Our accounting firm proudly serves businesses across Nanaimo, Ladysmith, Duncan, Parksville, Qualicum, Port Alberni, and Lake Cowichan. Whether you need assistance reporting your loan forgiveness on your income tax filing, help to better understand these new extensions, or guidance determining the next steps your business should take, contact our team today, and we’d be happy to assist!