During the pandemic, temporary financial assistance was provided to Canadian small businesses through a number of grant and loan programs initiated by the federal government. One of the largest of those programs was the Canada Emergency Business Account (CEBA) program, which ran from April 2020 to June 2021, and provided a total of approximately $50 billion in loan financing to just under a million small businesses.
Under CEBA program terms, qualifying small businesses could receive up to $60,000 in loans, with forgiveness of up to one-third of outstanding loan amounts provided where those CEBA loans were repaid by a specified deadline. The original deadline for repayment of loans under the CEBA program was the end of 2022, but that deadline was extended to December 31, 2023. On September 14, 2023, the federal government announced that further relieving changes would be made with respect to CEBA loan repayment schedules. Those changes include an extension of the repayment deadline, as well as a new extended deadline for businesses which opt to refinance their CEBA loan(s). The deadlines and repayment terms for CEBA loans, as outlined in the federal government Backgrounder, are now as follows.
- The repayment deadline for CEBA loans to qualify for partial loan forgiveness of up to 33 per cent is being extended to January 18, 2024.
- For CEBA loan holders who make a refinancing application with the financial institution that provided their CEBA loan by January 18, 2024, the repayment deadline to qualify for partial loan forgiveness now includes a refinancing extension until March 28, 2024.
- As of January 19, 2024, outstanding loans, including those that are captured by the refinancing extension, will convert to three-year term loans, subject to interest of five per cent per year, with the term loan repayment date extended by an additional year from December 31, 2025 to December 31, 2026. In other words, small businesses and not-for-profits will automatically have access to a three-year, low-interest loan of up to $60,000 if they have not repaid or refinanced their loan, providing those who are unable to secure refinancing or generate enough cashflow to repay their loans by the forgiveness deadline an additional year to continue repayment at a low borrowing cost.
Small businesses which repay their CEBA loans on or before the new deadline of January 18, 2024 (or March 28, 2024 if a refinancing application is submitted prior to January 18, 2024 at the financial institution that provided their CEBA loan), will still be eligible for partial loan forgiveness. Where a business benefits from loan forgiveness, any forgiven amount will be treated as income, which must be reported on the tax return file by the business, and on which tax must be paid.
Details of the current rules respecting CEBA loan repayments and forgiveness are outlined in the September14 Backgrounder, which is available at https://www.canada.ca/en/department-finance/news/2023/09/canada-emergency-business-account-government-extends-repayment-and-partial-loan-forgiveness-deadlines.html, and on the CEBA program webpage, which can be found at https://ceba-cuec.ca/.