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The CEBA Loan: One step closer to financial freedom

The Government of Canada announced an extension on the CEBA program that allows eligible loan holders to be entitled to the loan forgiveness incentive, if paid by January 18th, 2024.

What is the CEBA program?

The CEBA (Canadian Emergency Business Account) program was created to “offer interest-free loans of up to $60,000.00 for small business and not-for-profit businesses” (ceba-ceuc.ca).

Am I eligible for the extension?

The initial extension given by the Government of Canada for the CEBA program, originally stretched until December 31st, 2023, but as of September 14th, 2023, the CEBA repayment deadline for the loan forgiveness incentive had been extended till January 18th, 2024. All business owners who had received this initial extension, automatically have eligibility for this new extension, as the CRA had conducted their initial validity upon receiving the first extension. 

How can I pay my CEBA loan?

The three options to pay for all eligible CEBA loans.

  1. Pay off the required balance by January 18th, 2024, and be entitled to the Loan Forgiveness incentive.
  2. Pay off the full amount of the CEBA loan by December 31st, 2026 at an interest of 5% per annum applied from January 19th, 2024 onwards
  3. Finance your payment with your financial institution for the loan forgiveness incentive.
    1. Each institution and individual is entitled to their own interest rates, provided to them by the financial institution.
    2. If this option is something that is of interest to you, please contact your financial institution as they’ll have more information for your CEBA loan.

How much of the loan forgiveness can I be entitled to?

CRA stated that: “All loan holders who are in good standing, can repay the balance of the loan on or before January 18th of 2024, and can be eligible up to 33 percent of the CEBA loan. (A maximum value up to $20,000.00)”

For examples of different loan amounts, and how much of the loan forgiveness you can be incentivized to, refer to the table below that was cited from “ceba-cuec.ca”:

Maximum amount borrowedAmount repaid by Jan 18th, 2024Available forgiveness

What happens if you don’t pay off your loan by the new extended deadline?

If you are unable to pay off your loan by January 18th, 2024, your CEBA loan will turn into a term loan that requires full principal repayment by December 31st, 2026. From January 19th, 2024, to December 31st, 2026, an interest rate of 5% per annum will be applied to the outstanding balance of your CEBA loan.

For all inquiries/questions regarding the CEBA Forgiveness program, please call Senathi & Associates at (416) 479-0600 or email us at info@gtacpa.ca, and we’d be more than happy to be of assistance!

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