If you received a CEBA loan from the government during the pandemic, you might be in for a shock as the deadline for repayment approaches this week.
CEBA loans were meant to help small businesses affected by shutdowns during the COVID-19 pandemic. Loans up to $40,000 were initially offered before being increased to a maximum of $60,000 in December 2020.
Over 220 financial institutions across Canada offered CEBA loans to small businesses until June 2021.
What happens if you don’t repay your CEBA loan on time
The deadline for CEBA loans is on January 18, 2024. If a loan holder is able to pay their balance in full before the due date, they will save 33 per cent (up to $20,000) as loan forgiveness by the federal government.
If the balance is not paid in full by January 19, 2024, the CEBA loan will convert to a non-amortizing term loan with monthly payments. The full principal repayment will then be due on December 31, 2026.
Around 900,000 small businesses in Canada received a CEBA loan, according to the CBC. The Toronto Star reports that 4,000 restaurants across the country could close because of the repayment deadline.
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“If you are a small business and do not currently have the funds to repay your CEBA loan, you now have three years to repay it in full,” Katherine Cuplinskas, a spokesperson for federal Finance Minister Chrystia Freeland, told the Toronto Star.
Refinanced loans will be charged five per cent interest, Cuplinskas also confirmed.
Are you a small business that took a CEBA loan? Are you prepared to pay it back before the due date? Tell us in the comments below, on our Facebook page, or via our contact form.
Photo by Tim Mossholder on Unsplash
