Dear Clients and Friends,
The Canada Emergency Business Account (CEBA) program offered interest-free loans of up to $60,000 to small businesses and not-for-profits. CEBA loans were available from more than 220 financial institutions across the country.
For eligible CEBA loan holders in good standing, repaying the balance of the loan on or before January 18, 2024 will result in loan forgiveness on a portion of the debt. If the loan received was $40,000, then the amount to be paid back is $30,000. The remaining $10,000 will be forgiven if paid by the above deadline. If the loan received was $60,000, then the amount to be paid back is $40,000. The remaining $20,000 will be forgiven if paid by the above deadline.
CEBA loan holders that submit a refinancing loan application to the financial institution that provided their CEBA loan by January 18, 2024 but require a grace period in order to finalize the payout of their CEBA loan can still qualify for partial loan forgiveness if the outstanding principal of their CEBA loan, other than the amount of potential debt forgiveness, is repaid by March 28, 2024.
Please note that if your CEBA loan is outstanding on January 19, 2024, interest at a rate of 5% per annum will commence, even if you applied for refinancing on or before January 18, 2024 and are waiting for your refinancing application to be reviewed or the proceeds of an approved refinancing loan to be funded or applied to your CEBA loan balance.
If you are considering applying for refinancing, don’t leave it to the last minute. Financial institutions are likely to receive a large volume of CEBA refinancing applications. Make sure you apply on or before January 18, 2024.
Please contact your LCA tax advisor if you need further guidance.