Finance

CEBA Loan Repayment Deadline and Guide

Paul Sharpe, CPA, CA
/
September 18, 2023

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Your Guide to CEBA loan repayment: CEBA deadline information, how much to repay, how to pay, and what happens if you miss the deadline. Reading this article could save you $20k!

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CEBA Loan Repayment Deadline and Guide

Updated September 18, 2024

The Canada Emergency Business Account (CEBA) loan has been a lifeline for many Canadian small business owners, providing vital financial support in difficult times. 

Introduced as a response to economic challenges during the COVID-19 Pandemic, the CEBA loan offered accessible funds to eligible businesses.

Nearly 900,000 businesses have benefited from the CEBA loan program. And now, it’s important for those businesses to understand the repayment terms. 

Reading this article could save you $20,000, so take five minutes to learn about the latest and most pertinent information related to the CEBA loan repayment.

We’ll look at:

  • When to repay your CEBA loan to ensure you receive the loan forgiveness
  • How much of your CEBA loan to repay 
  • What happens if you miss the deadline for loan forgiveness
  • How to repay your CEBA loan with examples from common financial institutions
  • What happens if your business situation has changed since borrowing the funds

Read on to get the full picture or use the links in the table of contents above to jump to the section that you’re interested in.

Or if you'd rather watch Joe, check out this video below 👇

CEBA Loan Deadline

The CEBA loan repayment process and deadline are important topics for Canadian small business owners to understand. 

Below are the key details regarding the deadline and how it has evolved.

When is the CEBA Repayment Deadline?

As of the most recent update, The CEBA loan deadline for interest-free repayment and loan forgiveness is:

January 18, 2024

Repaying the outstanding balance of the loan (other than the amount available to be forgiven) by this date qualifies you for loan forgiveness and ensures that you don’t pay any interest on the eligible amount.

The January 18, 2024 deadline is important for those looking to receive the $10,000 or $20,000 loan forgiveness amount. All applicants that have met the CEBA eligibility criteria will also be eligible to receive the applicable loan forgiveness if they meet this January 18, 2024 repayment deadline. More on loan forgiveness below.

There is also a new "refinancing deadline." If you request refinancing from the institution that holds your CEBA loan before January 18, 2024, you'll have until March 28, 2024 to have that refinancing in place and still qualify for partial loan forgiveness.

January 18, 2024 also marks the end of the interest-free loan period. Businesses with a loan balance after that date will begin to pay interest on that balance at a rate of 5% per annum. After this, the loan will be due in full on December 31, 2026.

Important:

  • Plan Ahead - Give yourself time to plan for repayment so you don't miss out.
  • Don't Pay Last Minute - Don't leave repayment until the last minute as you may run into unforeseen issues and it may take a couple of days for the transaction to complete.
  • Consider Borrowing - It could make sense to borrow funds to pay by January 18, 2024 to ensure you receive the loan forgiveness.

CEBA Deadline Extension 

Over the course of the CEBA program, there have been changes to the repayment terms, reflecting the ongoing economic challenges faced by Canadian businesses. 

Initially, the interest-free period and repayment deadline was December 31, 2022, but recognizing the need for continued support, the Government of Canada extended this to January 18, 2024.

Borrowers that met CEBA eligibility criteria and are in good standing are eligible for this extension. If eligible, you should have already been contacted by your financial institution with details regarding the new repayment date.  

If you’re not sure, check back on correspondence from your financial institution or contact them directly to ask any questions about your specific repayment schedule.

How Much of Your CEBA Loan Should Be Paid Back?

Let's dive into how much needs to be paid back, depending on the loan taken, and break down how the forgiveness works.

The CEBA loan program offered two main loan amounts to Canadian businesses: $40,000 and $60,000. 

The most common loan repayment scenarios will be:

  1. Businesses borrowing $40,000 and repaying $30,000 by January 18, 2024 (receiving $10,000 in forgiveness)
  2. Businesses borrowing $60,000 and repaying $40,000 by January 18, 2024 (receiving $20,000 in forgiveness)

However there is a little bit more to it that needs to be discussed.

If You Borrowed $40,000 or Less

Repaying the outstanding balance of the loan (other than the amount available to be forgiven) on or before January 18, 2024 will result in loan forgiveness of 25 percent (up to $10,000).

The most common example in this category would be those borrowing exactly $40,000.

$40,000 Loan Example

For those who received a $40,000 loan, $10,000 (25% of the loan) is forgivable if $30,000 is repaid by the January 18, 2024, deadline.

However if a business borrowed less than $40,000, they could qualify for a different amount of forgiveness (equal to 25% of the loan).  

For example:

$30,000 Loan Example

For those who only borrowed $30,000, they could qualify for $7,500 forgiveness (25% of the original loan), meaning they only pay back $22,500 of the total $30,000 by the January 18, 2024 deadline.

If you Borrowed More Than $40,000 Up To $60,000

If you received a $40,000 loan and subsequently received the $20,000 expansion, the terms of your forgiveness are slightly different.

Repaying the outstanding balance of the loan (other than the amount available to be forgiven) on or before January 18, 2024 will result in loan forgiveness of up to $20,000 based on a blended rate:

  • 25% on the first $40,000; plus
  • 50% percent on amounts above $40,000 and up to $60,000.

Again, the most common example we would see in this category is a business borrowing exactly $60,000.

$60,000 Loan Example

For those who were approved for a $60,000 loan, $20,000 is forgivable if $40,000 is repaid by the January 18, 2024, deadline. 

The forgiven amount is calculated as $40,000 x 25% + $20,000 x 50% = $20,000

We’ll look at another example to fully clarify how forgiveness works for the $40,000 to $60,000 borrowers.

$50,000 Loan Example

For those who borrowed $50,000, $15,000 is forgivable if $35,000 is repaid by the January 18, 2024, deadline. 

The forgiven amount is calculated as $40,000 x 25% + $10,000 x 50% = $15,000

Consequences of Missing the Deadline

Meeting the CEBA repayment deadline is essential for maximizing the financial benefits of the program and avoiding additional costs.

Here's what you need to know about what happens if you miss the January 18, 2024 deadline.

Loss of Forgiveness

Missing the January 18, 2024, deadline is not something you want to overlook, as it comes with some significant financial implications.

Failure to Repay in Full by the Deadline

If the outstanding balance (other than the amount available to be forgiven) isn't repaid in full by January 18, 2024, the forgiveness offer will no longer apply. 

Those who don't pay their loan in full by the deadline, would need to repay the entire loan amount, including the portion that could have been forgiven if they had met the deadline.

“In full” is in bold above because it is so important.

Let’s go back to our loan forgiveness examples to demonstrate 👇

For those who received a $40,000 loan, $10,000 (25% of the loan) is forgivable if $30,000 is repaid by the January 18, 2024, deadline.

If a borrower paid back $29,999 instead of $30,000, the loan would not technically be paid in full and their financial institution would not be able to offer any loan forgiveness. This borrower would still owe $10,001 on their loan ($40,000 less their $29,999 repayment).

This is an extreme example of a business falling short on repayment by $1, but a similar situation will likely happen to a borrower who fails to repay the loan in full by January 18, 2024.

Interest Charges Post-Deadline

While the CEBA loan offers interest-free repayment until January 18, 2024, interest charges will apply if the loan is not paid back in full by that date.

Starting January 19, 2024, interest will be charged on the outstanding balance at a rate of 5% per annum. 

This interest will begin to accrue on the remaining balance, so it's in your best interest to make the payment before the deadline if possible.

Those who haven’t paid the balance in full by January 18, 2024 must continue to make repayments on the loan. 

If the loan isn’t repaid by January 19, 2024, the loan becomes a 3-year term with a 5% fixed interest rate per year. 

Only interest payments are required on a monthly basis with the outstanding principal due in full by December 31, 2026.

Check with your financial institution for post-deadline repayment details. You can contact your branch or often you’ll  find repayment info on your financial institution’s website.  

Links to Repayment Info for Some Common Financial Institutions:

Check out the links for more details, but we also recommend contacting your financial institution to confirm your repayment terms.

How to Repay Your CEBA Loan

Now that we know when to repay your loan and how much to repay, let’s determine how to actually make payments.

Unfortunately, the method of repayment will be different for each financial institution. This means that the fool-proof step to take is to contact your financial institution to find out how to repay your CEBA loan.

However, some financial institutions have made the method of repayment clear. Below are specific repayment instructions for some of the major banks in Canada.

CIBC - CEBA Loan Repayment Instructions

CIBC has provided public CEBA loan repayment instructions.  If you bank with CIBC, here is how to repay your CEBA loan.

  1. Select the Customer Services tab.
  2. Under Account Services, select CEBA Loan Repayment.
  3. Under To Account, select the CEBA loan you want to repay.
  4. Choose the From Account.
  5. Enter the repayment amount.
  6. Select Submit.
  7. Review payment details. If satisfied, select Yes. CEBA loan payments can take 24 to 72 hours to process. Make sure there are enough funds in the account until your payment has gone through.
  8. Print the confirmation page for your records.

Note: The CEBA loan balance on Online Banking can take up to 6 weeks to update.

You can also make payments by speaking with an advisor at any CIBC Banking Centre.

RBC - CEBA Loan Repayment Instructions

RBC has also provided public CEBA loan repayment instructions.  If you bank with RBC, here is how to repay your CEBA loan.

Payments to your CEBA loan can be made at any time through the RBC mobile app or online banking for business. The process is just a simple funds transfer from one of your other accounts to the CEBA loan account.

Transfer Funds Using RBC Online Banking:

  1. Sign in and go to the Quick Payments & Transfers section on the right side of the page.
  2. Choose a From and set the “To” account to your CEBA loan.
  3. Enter an amount.
  4. Click Submit.
  5. Review the transfer details and click Confirm.

Transfer Funds Using the RBC Mobile App:

  1. Tap Move Money in the Navigation Bar
  2. Tap Transfer Between My Accounts
  3. Follow the on-screen instructions, making sure to choose your CEBA loan account as the “To” account.

Once the balance of your CEBA loan equals your eligible loan forgiveness amount, RBC will automatically apply your loan forgiveness payment and close your loan.

TD - CEBA Loan Repayment Instructions

TD has given some very basic CEBA loan repayment instructions. Go to TD’s COVID-19 FAQ and click the “Business Banking” tab.  It will tell you that:

Payments can be made via a TD Canada Trust Branch or TD EasyLine (1-855-646-8804). CEBA loans cannot be set up for automated monthly payments however lump sum payments can be made at any time.

BMO - CEBA Loan Repayment Instructions

BMO has provided basic CEBA loan repayment instructions on their CEBA FAQ Page.  Scroll down to view “How can I make a payment to my CEBA loan?” and it will tell you:

Clients can make payments to their CEBA loans in Online Banking (OLB) and Online Banking for Business (OLBB). To make a payment, a client can use the bill payment feature in OLB and OLBB. Alternatively, clients can contact their local branch or Relationship Manager to make a payment.

Scotiabank - CEBA Loan Repayment Instructions

Scotiabank has provided CEBA loan repayment instructions on their CEBA FAQ Page.  Scroll down to view “How can I make a payment to my CEBA loan?” and it will tell you:

Payments can be made to your CEBA loan by making a bill payment to the ScotiaLine for business VISA that was set-up as your CEBA.

Note: it's essential to confirm these details with your respective bank as these instructions might change over time.

Business Changes and Your CEBA Loan

Here are some really quick answers to questions about business changes and your CEBA loan.

TL;DR - business changes generally don’t remove obligation to repay the CEBA loan. Contact your financial institution for more info if you’re in one of these situations.

What Happens if Your Business Closes?

If your business closes after borrowing funds, you must still repay the CEBA loan according to the terms provided by your financial institution.

It’s important to consult your financial institution to determine how to repay the balance owing.

What Happens if There is a Change of Business Ownership?

If your business ownership has changed, the effect on repayment terms depends on the legal structure (sole proprietor, corporation, etc.). 

Unfortunately, the answer again is to contact your financial institution to receive further details.

Insolvency or Bankruptcy

If your business becomes insolvent or goes bankrupt before repaying your CEBA loan, you’ll need to contact your financial institution for information on how this affects repayment and other loan terms.

Repayment After Owner's Death

If the business owner is deceased, please reach out to your financial institution for details on repayment terms and other loan aspects.

Who to Contact for CEBA Loan Assistance

For Specific Loan Questions

Your financial institution is the best source for questions about loan balance, repayment methods, and terms.

For CEBA Program Questions

For questions about eligibility or application status, contact the CEBA Call Centre at 1-888-324-4201, available Monday to Friday, 9AM to 6PM Eastern Standard Time, excluding holidays.

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Article by
Paul Sharpe, CPA, CA
.
Originally published
September 18, 2023
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