CEBA Repayment: Important Update
This is an important update regarding the Canadian Emergency Business Account loan repayment. There are certain important dates which you need to understand.
December 31, 2023.
If you have received any e mail from your bank that you are not eligible for the debt forgiveness, then you must pay the full amount before December 31,2023. So, it is strongly recommended that you check your status of loan with them, that you are eligible for the forgiveness or not. As the date is coming near so it is very important to contact your financial institution as soon as possible.
Next important date is January 18, 2024.
If you are eligible for the debt forgiveness it is important that you make payment for the CEBA repayment before January 18, 2024, and if you do so, then you will be eligible for that forgiveness.
Example: you borrowed $40,000 you are eligible for $10, 000 debt forgiveness and if you got $60,000 then you are eligible for $20,000 debt forgiveness.
Recently the Government of Canada announced a 3rd date which is March 28, 2024, so this is called extended debt forgiveness deadline. If you do not have the money to pay off the CEBA loan, then you can call your Financial Institution for refinance the loan equal to the amount to be repaid and with that amount once you pay off the CEBA loan then you are eligible for the debt forgiveness. As you know if you apply for the debt forgiveness before January 18, 2024, then it may take some time for the Institution to process your refinance application, so that is why Government has given some additional time up to March 28, 2024, to arrange the refinance and pay off the CEBA loan to get the debt forgiveness.
Please be advised that after January 18, 2024, the interest will accrue on the amount going. They are saying it 5% but you must check with your financial situation that what will be the exact amount of it.
Partial repayment – No forgiveness
Another point to be noted is that if you partially repay the CEBA loan you are not eligible for the debt forgiveness example: if you borrowed $40,000 you must pay back $30,000 full. If you pay $29,000 than you have to pay back full $40,000. If you borrowed $60,000 to be eligible for the $20,000 forgiveness you must fully pay $40,000 even if you pay $1 less than $40,000 you must pay back the full amount of $60,000 and then you are not eligible for the debt forgiveness. This is very important point.
What are the benefits if you refinance your CEBA loan?
So, this is very important to understand that if you have the money to pay back the CEBA loan even than you should try to refinance that loan. If you get refinance than you can keep your money and then use it for cash flow in your business or for any other purposes and the Bank will pay off the loan with their own refinance money. The only thing is you have to pay some interest on it and that bank loan is basically open loan, so you can pay it anytime and with the refinance you get the benefit of repayment debt forgiveness and borrowing more time to pay the Bank or even if you don’t pay the bank loan you can pay it in installment depending upon your cash flow. You can do the cost benefit analysis, if you have a better use of funds then paying off the CEBA loan and getting refinance from the Bank, after that repaying some interest then you can check it yourself based on the cost benefit analysis.
There is also an Important thing to understand that we have seen recently some advertisements where they claim that you do not have to pay back the CEBA loan and they purchase your corporation. So, we have seen some signs on the street-light polls that they are buying CEBA corporations. It is very important for you to stay away from these frauds because it is a government money, and you should not play with that. Please make sure you repay it, and you meet the terms, if somebody does a fraud with you ultimately, it is your responsibility to the Government and that can jeopardise your records with Government which can result in fines and some other legal actions by the government.
I hope that all this information is useful to you, if you have any further query, we suggest that contact your bank first or you can contact our office as well.