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The deadline for repaying the CEBA loan is now December 26, 2026, but you can get a break if you pay a smaller portion of it by January 18, 2024.

Many businesses in Canada struggled as a result of the COVID pandemic. In response, the Canadian government offered several financial programs to help. This includes the Canada Emergency Business Account (CEBA), a loan program that offered up to $60,000 (interest-free) to eligible businesses. But eventually, the borrowed funds from this loan must be repaid.

Originally, the loan was due for repayment by December 31, 2022, and was extended to December 31, 2023. The big question is how to qualify for the loan program’s forgiveness policy?

When Does The CEBA Loan Repayment Begin?

CEBA borrowers in good standing who pay back the balance of their loan on or before January 18, 2024, will have a portion of their loan forgiven. Until then, the principal repayment is not required.

If you do not pay the loan in full by January 18, 2024, you’ll have until December 31, 2026, to fully repay your loan, though interest will apply. Plus, you won’t be eligible for the loan forgiveness.

How Much Of The CEBA Loan Do You Have To Repay?

Eligible businesses can have a 25% of their loan forgiven if they borrowed $40,000 or less and repay their loan by Jnauary 18, 2024. So the maximum you may be forgiven for loan amounts of $40,000 or less is $10,000.

  • For a $20,000 loan, $5,000 may be forgiven if $15,000 is paid back by January 18, 2024.

If you borrowed between $40,000 and $60,000, you may be eligible for loan forgiveness up to $20,000. You’ll get 25% forgiven for the first $40,000 of the loan. Then 50% of the amount between $40,000 and $60,000. 

  • For example, if you borrowed $50,000, $15,000 may be forgiven if $35,000 is paid back by January 18, 2024.

This means businesses that make the CEBA loan repayment deadline in January 2024 are eligible for the loan forgiveness offer. For instance, if your business applied for $60,000 and paid back $40,000 by the due date, your loan would be considered paid.

However, by January 19, 2024, if you don’t pay the whole amount, any remaining balance of a CEBA loan will convert to a 2-year loan at a rate of 5%. The loan will then be due by the end of 2025.

Do You Have To Repay The Entire Amount By The Deadline?

You don’t have to repay the entire amount by the January 18, 2023, due date. However, you’ll lose the loan forgiveness benefit of the loan as well as the 0% interest. If you can’t make payments and choose to pay via installments, you’ll have till the end of 2026 to pay the loan.

Loan Repayment Terms

Those who cannot repay the loan by January 18, 2024, will have till 2026 to pay their loan. During this time, a 5% interest rate will be applied and you’ll be required to make interest payments. The frequency of these payments will be based on your financial situation and determined by your financial institution.

The principal amount is not required until the due date. Though, it may be wise to make regular installment payments to ensure the loan is repaid in full when it’s due. That way, you can match your payments to your business’s cash flow rather than make a lump sum payment at the end.

Do You Have To Repay The Loan If Your Business Closed? 

The answer to this question depends on the type of business you have. For instance, if your business was incorporated and you close down, you may not have to file for personal bankruptcy since the corporation owes the outstanding debt. You would not be considered personally liable for the corporation’s unpaid CEBA loan. 

However, if your business were a partnership or sole proprietorship, you would be personally liable for the unpaid loan. In this case, you would still have to repay the outstanding balance. If you can’t come up with the funds, you may be able to include your CEBA loan in a bankruptcy or consumer proposal

Do I Have To Repay The Loan If My Business Declared Bankruptcy?

If your business was incorporated and goes bankrupt, it is still the corporation that is responsible for repaying the principal of the CEBA loan, not you. The lender cannot come after your personal assets to cover any losses as a result of corporate bankruptcy. 

But if your business was a sole proprietorship or partnership that received CEBA financing, it will be your responsibility to repay the balance, as noted above. With these types of businesses, your personal assets and those of your business are not distinguished. As such, your personal assets could be seized to help the lender cover the losses from the loan default.

How To Repay The CEBA Loan

The exact steps for repaying your CEBA loan depend on your financial institution. That said, the CEBA loan can typically be repaid in the following ways:

  • Online banking
  • Bank mobile app 
  • Bank ATM
  • Telephone banking
  • Physical branch in person

What If You Can’t Afford To Repay The Loan?

If you’re unable to pay your CEBA loan by January 18, 2024 you’ll no longer be eligible for the loan forgiveness offer as described above. You’ll then need to start paying 5% interest on the remaining balance until the loan is paid back in full.

If you cannot pay the loan balance in full by December 31, 2026, your loan will be in default. This may impact your credit score or your business credit score. To discuss your options, you’ll need to speak with your lender.

Your lender may be open to alternative arrangements to have the loan repaid. Otherwise, you may need to speak with a Licensed Insolvency Trustee (LIT) to discuss the possibility of filing a consumer proposal or personal bankruptcy. 

Can You Use A Personal Loan To Repay The CEBA Loan?

There are potentially serious consequences for defaulting on your CEBA loan. Luckily, there are some options available that can help you avoid defaulting, including taking out a personal loan or refinancing.

If you’re unable to repay your loan by the due date, you can ask your lender about refinancing your loan. This may allow you to extend your loan further, but be aware that interest rates may be higher too.

If refinancing is not possible, consider applying for a personal loan with an alternative lender. Your lender will provide you with a lump sum of money that you can use to pay off your CEBA loan in full. This will satisfy your obligations for the CEBA loan.

Then, you can repay your personal loan via smaller installment payments spread out over a longer term. This will give you more time to come up with the funds while making more manageable payments over the loan term.

Just keep in mind that you may be charged higher interest on your loan, compared to the 5% interest rate. As such, opting for a personal loan may be more expensive over the long run compared to paying off your CEBA loan by the due date.

Pros Of A Personal Loan

  • If you use another loan to pay off your CEBA loan by the December 31, 2023, due date, you won’t lose your loan forgiveness eligibility.
  • With a personal loan, you may have a longer prepayment period which means smaller payments.
  • You can avoid defaulting on the loan, which will protect your credit score.

Cons Of A Personal Loan 

  • You’ll pay a higher interest rate compared to your CEBA loan.

Who Can You Contact For More Info?

If you have specific questions about your CEBA loan and repayments, get in touch with a representative from your financial institution. Otherwise, you can call the CEBA Call Centre for all other inquiries at 1-888-324-4201.

Final Thoughts On The CEBA Loan Repayment

The CEBA loan program may have helped you stay afloat during the pandemic, but eventually, you’ll need to repay what you borrowed. Luckily, the due date has been extended to the end of 2023 to avoid paying interest, if your account is in good standing. Otherwise, you have until the end of 2025, though you’ll be paying interest added to your principal.

CEBA Loan Repayment FAQs

Can you refinance your CEBA loan with your bank? 

Yes, it’s possible to refinance your CEBA loan. However, you’ll need to apply with your lender to see if you qualify, If you’re denied a refinance with your bank, you may have better luck with an alternative lender.

Can I ask to have my account reviewed to change my repayment terms?

No, the CEBA Program is no longer reviewing or assessing repayment terms because the application and funding periods for the program are closed.

Do I have to report the CEBA loan forgiveness in my income taxes?

Yes, you will need to report your CEBA loan forgiveness portion when you file your income taxes, as it is taxable.
Lisa Rennie avatar on Loans Canada
Lisa Rennie

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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