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Is CEBA loan forgiveness possible?

Posted on 8 February 2024

Written by Alan Spergel

The Canada Emergency Business Account (CEBA) played a crucial role in supporting small businesses during the challenging times brought about by the COVID-19 pandemic. With a repayment deadline looming, and updates to the repayment extension, it can be confusing to know what to do with your CEBA loan repayments. You might also be panicking if you are worried you cannot afford to repay your loan. As many Canadian businesses strive to recover and move forward, many business owners are now looking into the process of CEBA loan forgiveness. In this guide, we share all you need to know about CEBA loan forgiveness.

What is CEBA?

CEBA was introduced by the Canadian government to provide financial relief to small businesses impacted by the pandemic. It offered interest-free loans of up to $60,000 to eligible businesses, with a portion of the loan forgivable if specific conditions are met. CEBA loan forgiveness is a hot topic for many businesses trying to alleviate their financial burdens and begin the journey to a stronger financial future post-pandemic.

Is CEBA loan forgiveness possible?

The CEBA loan forgiveness repayment date of January 18, 2024, for eligible CEBA loan holders in good standing has now passed. Eligible CEBA loans that are still outstanding are now non-amortizing term loans with full principal repayment due on December 31, 2026. If you are an eligible loan holder in good standing and you submitted a refinancing loan application to your lender before January 18, 2024, you might still be able to qualify for partial loan forgiveness if the outstanding principal of your CEBA loan is repaid on or before March 28, 2024. Any loan holders that did not qualify for the new extended term had to repay their outstanding CEBA loan amounts in full by December 31, 2023. As this date has now passed, loan holders who still owe will be contacted by their lender to request a lump sum repayment of their outstanding debt. If this did not occur, your CEBA loan debt will likely go into collections.

What are the terms of CEBA loan forgiveness?

Eligible CEBA loan holders in good standing have the following terms of forgiveness:

  • If you borrowed $40,000 or less and repaid the outstanding balance of the loan before January 18, 2024, you would gain CEBA loan forgiveness of 25% (up to $10,000).
  • If you borrowed more than $40,000 and up to $60,000 by subsequently receiving the $20,000 expansion, the terms of your CEBA loan forgiveness have changed. Repaying the outstanding balance of the loan (other than the amount to be forgiven) before January 18, 2024 will mean you can receive a single forgiveness of up to $20,000. This is based on 25% of the first $40,000, and 50% on amounts over $40,000 up to $60,000.
  • If you fully repaid your original $40,000 loan, claimed CEBA loan forgiveness, and received the $20,000 expansion, by repaying the outstanding balance of the $20,000 expansion before January 18, 2024 you will receive CEBA loan forgiveness of up to 50%.

What if you cannot repay your CEBA loan?

If you are concerned that you cannot repay your CEBA loan, it is important to stay calm. At Spergel – the ‘get rid of debt’ people – we have helped plenty of individuals and businesses on their journey to a debt free future. We have seen all kinds of situations, and treat every individual we meet with compassion and understanding. If you are facing financial difficulty and are worried you cannot repay your CEBA loan, you should book a free, no obligation consultation with one of our experienced Licensed Insolvency Trustees. Our professionals are legally able to file all forms of debt relief in Canada, and will review your circumstances to advise you on the best form of CEBA loan debt relief for your circumstances.

Is CEBA loan forgiveness possible? FAQs

Here are some of the most commonly asked questions regarding CEBA loan forgiveness:

What happens to a CEBA loan if your business closes in Canada?

If your business in Canada closes after receiving a Canada Emergency Business Account (CEBA) loan, you are typically still responsible for repaying the loan, even if forgiveness conditions are not met. CEBA loans have forgiveness conditions, and a portion of your loan might have been forgiven if specific criteria were met. Communication with your lender is crucial in understanding your repayment terms, potential penalties, and available options. You should stay informed on government updates on financial assistance programs, and it is a good idea to seek advice from a Licensed Insolvency Trustee at Spergel if you are concerned about the implications of business closure on your CEBA loan.

How to get a loan to start a business in Canada?

You should approach securing a loan for your business with caution, and we would always recommend seeking professional advice before committing to taking on any loan. Begin by creating a comprehensive business plan that outlines your goals and financial projections. Assess and improve your personal and business credit scores, as a positive credit history enhances your eligibility. Research various lenders, including banks, credit unions, and government programs, and gather all necessary documentation such as your business plan, financial statements, and tax returns. Apply for the loan with your chosen lender, and be prepared to offer collateral or personal guarantees if required. You might also want to explore government assistance programs like the Canada Small Business Financing Program or the Business Development Bank of Canada for potential support.

At Spergel, we will help you to navigate CEBA loan forgiveness. By working to meet the relevant eligibility criteria, sticking to deadlines, and working closely with our expert Licensed Insolvency Trustees, your business can streamline the CEBA loan forgiveness process and focus on rebuilding and thriving in the post-pandemic landscape. Book a free consultation today to learn how the ‘get rid of debt people’ can help you on your journey to debt relief, along with thousands of other Canadians.

Alan Spergel

Alan Spergel

Alan Spergel is the founder and President of Spergel. A leader in our industry, he is also a former chair of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) and has served on Canada's Superintendent of Bankruptcy Management Board. He actively supports multiple charities, ensuring that Spergel gives back to our communities and has recently been appointed as Chairman of the Board of the Humber River Hospital Foundation. Outside of the boardroom, you can find Alan playing golf, tennis, or skiing and enjoying quality time with his grandchildren.

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