Last updated: Nov. 20, 2023
The Canadian federal government established the Canada Emergency Business Account (CEBA) loan to provide financial support to Canadian small businesses and non-profits during the challenges posed by the COVID-19 pandemic.
Here we’ll provide information on:
- CEBA repayment deadlines
- CEBA partial loan forgiveness
- Tax considerations for the forgivable portion of the CEBA loan
What is the Canada Emergency Business Account (CEBA) loan?
The CEBA program provided partially forgivable, interest-free loans of up to $60,000 to qualifying small businesses and not-for-profit organizations to help cover their operating costs during the COVID-19 pandemic.
Applications for the loan were processed through individual financial institutions and closed June 30, 2021.
What are the repayment deadlines for the CEBA loan?
The original repayment deadline for the CEBA loan was December 31, 2022.
Recognizing there was a need for an extension, a new deadline of December 31, 2023, for all eligible borrowers in good standing was announced, and this deadline was most recently extended to January 18, 2024.
Unless you have been informed that your business is eligible for loan forgiveness, your repayment deadline has not changed and you are required to repay your CEBA loan in full by December 31, 2023.
We provide a summary chart of CEBA Loan deadlines at-a-glance below.
Are you eligible for partial loan forgiveness?
Borrowers in good standing were generally eligible for partial loan forgiveness and will have been contacted by their financial institution to advise them of their eligibility.
If you are a borrower in good standing and your loan is eligible, your repayment deadline is January 18, 2024. Eligible CEBA loans repaid by this date will qualify for partial loan forgiveness.
If you are a borrower in good standing and your loan is eligible for forgiveness, but you are unable to meet the January 18, 2024, deadline, you may apply for a refinancing extension with your financial institution. You must submit an application by January 18, 2024.
If your refinancing application is approved, your CEBA loan will then become due March 28, 2024, but your loan balance will be subject to interest.
Meeting this repayment deadline will also qualify you for partial loan forgiveness.
CEBA Loan deadlines at-a-glance
What if I cannot repay my CEBA loan by the deadline?
If you are a borrower in good standing and eligible for loan forgiveness, but unable to repay the loan by your deadline (as above), your CEBA loan will convert to a three-year term loan with full principal repayment due on December 31, 2026.
The outstanding balance of your CEBA loan will be subject to an interest rate of 5% per annum from January 19, 2024, to December 31, 2026.
If your loan repayment deadline is set at December 31, 2023 as you do not qualify for an extension or partial loan forgiveness, failure to repay CEBA by this date will put you in default of the loan.
Contact your financial institution if you require additional information regarding interest and payment schedules on your CEBA loan.
How much of my CEBA loan will be forgiven?
Provided you are a borrower in good standing, your CEBA loan is eligible per your financial institution, and you repay the loan by January 18, 2024, you may receive up to $20,000 loan forgiveness as follows:
- CEBA Loans of $40,000 can receive up to $10,000 loan forgiveness if you repay $30,000 before January 18th, 2024
- CEBA Loans of $60,000 can receive up to $20,000 loan forgiveness if you repay $40,000 before January 18th, 2024
If you applied for a refinancing extension and are approved to repay the loan by March 28, 2024, your loan forgiveness will also be as outlined above, but your payable portion will be subject to 5% interest (per annum).
Our recommendation is that you contact your financial institution to confirm your loan forgiveness eligibility and repayment deadlines because there are different CEBA loan and potential forgiveness amounts based on the expanded loan limits made available during the original application period.
How do I repay my CEBA loan?
Payment arrangements are made through the financial institution that administered your CEBA loan.
Is the forgivable portion of my CEBA loan considered taxable income?
Yes.
The forgivable portion of your CEBA loan is taxable and should have been claimed as income in the year the loan was received .
If you have already claimed the forgivable portion as income and:
- You qualify for partial loan forgiveness, and repay the loan by the stated deadline, there are no additional tax obligations to your business related to your CEBA loan.
- You do not qualify for partial loan forgiveness and repay your loan by the applicable deadline, you may deduct that amount from your 2023 taxable income.
If you have not yet claimed the forgivable portion as income and:
- You qualify for partial loan forgiveness, and repay the loan by the stated deadline, you must include the forgivable portion as taxable income on your 2023 tax return.
- You do not qualify for partial loan forgiveness and repay your loan by the applicable deadline, there are no additional tax obligations to your business related to your CEBA loan
Please speak with a tax specialist to ensure you are compliant with the requirements related to your loan forgiveness and taxable income.
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