There is less than a week to the repayment deadline for the Canada Emergency Business Account loans, if businesses want to be able to keep the forgivable portion.
These were loans from the federal government during the pandemic.
The Canadian Federation of Independent Business reminds business owners that to secure the up to $20,000 forgivable portion, you have to pay by January 18th.
A news release from the business advocate says over 900,000 small businesses have CEBA loans and 22 per cent aren’t in the position to repay them at this time, so not extending the deadline for another year has huge implications for Canada’s economy.
These loans are just a part of the average $110,000 in COVID-related debt inherited by two-thirds of Canada’s small business owners, according to the CFIB.
Advice for businesses from the CFIB includes:
-If you are looking to borrow to repay your CEBA loan and keep the forgivable portion, you need to apply for a refinancing loan with the bank that issued your original CEBA loan before January 18, 2024, to qualify for a special extension to March 28, 2024. As bank staff often do not understand these rules, CFIB recommends small business owners ensure they document any requests or applications for refinancing.
-If you are rejected for refinancing from your CEBA bank, you will still qualify for the extension to March 28, 2024, as long as your account is in good standing. This provides some extra time to look for alternative financing.
-If you remain eligible but cannot repay or borrow to repay your loan, you will lose the forgivable portion, but you will have three years until the end of 2026 to repay the balance at 5% interest.
-For approximately 50,000 small businesses that have been deemed ineligible for the loan they received and spent, they have already passed their deadline of December 31, 2023 and have lost access to the forgivable portion. Collection efforts will begin in the spring of 2024. After extensive pressure from CFIB, the government announced it will provide new flexibility for these cases, including up to a two-year repayment period with no penalties and 5% interest.
