CEBA loans that did not qualify for the extension

On January 2, 2023, the CEBA website was updated to provide the following comment:

Loan Holders that did not qualify for the new extended term were required to repay the outstanding amount of their CEBA Loan(s), in full, by December 31, 2023. This deadline has now passed, Loan Holders with outstanding balances as of January 1, 2024, will be contacted by their financial institution to request a lump sum repayment of the outstanding debt. If, at that point, they do not fully repay their CEBA loan to their financial institution, the financial institution will likely be required to assign their loan to the government’s CEBA Program for collection efforts.

The following question and answer was also provided:

What happens if I was deemed ineligible for the CEBA loan I received and informed that I am required to repay my loan in full by December 31, 2023, but I cannot repay by that date?

If you are unable to repay by December 31, 2023, your loan may be assigned to the government’s CEBA Program for collection efforts in spring of 2024. If your loan is assigned to the CEBA Program, you will be offered appropriate leniency on your repayment schedule. The CEBA Program will conduct a case-by-case review and could offer repayment flexibilities based on your ability to repay, such as an up to two-year repayment arrangement.

CEBA question re. financing added

The following question and answer was added to the CEBA website:

What are the requirements for a refinancing application on or before January 18, 2024 to qualify for the extended forgiveness deadline of March 28, 2024?

If you are an eligible loan holder in good standing and you apply to refinance your CEBA loan at the same financial institution that originally provided your CEBA loan on or before January 18, 2024, you can qualify for partial loan forgiveness if the outstanding principal of your CEBA loan, other than the amount available to be forgiven, is repaid on or before March 28, 2024. This does not prevent you from also applying for refinancing with other lenders—as long as you applied for refinancing at the same financial institution that originally provided your CEBA loan and your CEBA loan is repaid by March 28, 2024, you can qualify for partial loan forgiveness.

To submit a refinancing application, please contact the financial institution that provided your CEBA loan for more details on the refinancing options available to you and their application processes. In order to provide you with flexibility to find the most suitable refinancing solution for your situation, the CEBA Program does not limit the loan type or terms that qualify as a refinancing application. As such, a range of potential refinancing solutions may be offered by your financial institution, including applying for or requesting new credit or making or requesting changes to an existing credit facility for the purpose of repaying your CEBA loan. Refinancing products provided by financial institutions are conventional loans between you and your financial institution. They are underwritten using the standard lending practices of your financial institution and are not affiliated with the CEBA Program or the Government of Canada.

Please note that if your CEBA loan is outstanding on January 19, 2024, interest at a rate of 5% per annum will commence, even if you applied for refinancing on or before January 18, 2024 and are waiting for your refinancing application to be reviewed or the proceeds of an approved refinancing loan to be funded or applied to your CEBA loan balance.

If you are considering applying for refinancing, don’t leave it to the last minute. Financial institutions are likely to receive a large volume of CEBA refinancing applications. Make sure you apply on or before January 18, 2024.

CEBA FAQs added

On September 20, 2023, the CEBA FAQ website was updated to reflect the September 14, 2023 announcement which extended deadlines. Some of the key FAQ’s updated include :

What are the repayment terms for the $40,000 and $60,000 loan and the $20,000 expansion?

Eligible CEBA loan holders in good standing have the following repayment terms:

Interest:

• 0% per annum interest until January 18, 2024

• 5% per annum interest starting on January 19, 2024; interest payment frequency may vary by financial institution

Repayments & Maturity:

• No principal repayment required before January 18, 2024; if loan remains outstanding on January 19, 2024, it will convert to a non-amortizing term loan with full principal repayment due on December 31, 2026

Debt Forgiveness:

• If the outstanding principal, other than the amount of potential debt forgiveness, is repaid by January 18, 2024, the remaining principal amount will be forgiven

• If you have submitted a refinancing loan application to the financial institution that provided your CEBA loan by January 18, 2024 but require a grace period in order to finalize the payout of your CEBA loan, you can still qualify for partial loan forgiveness if the outstanding principal of your CEBA loan, other than the amount of potential debt forgiveness, plus any applicable interest is repaid by March 28, 2024

Am I eligible for the January 18, 2024 repayment deadline to qualify for partial loan forgiveness?

Loan holders that met CEBA eligibility criteria and are in good standing are eligible for the January 18, 2024 repayment deadline to qualify for partial loan forgiveness. Loan holders that were contacted by their financial institution in late 2022 informing them that they qualify for a repayment deadline of December 31, 2023 to qualify for partial loan forgiveness will now benefit from an extended repayment deadline of January 18, 2024 to qualify for partial loan forgiveness. Loan holders will be contacted in the coming months by their financial institution to confirm their eligibility for the January 18, 2024 repayment deadline to qualify for partial loan forgiveness.

How do I qualify for loan forgiveness?
Loan holders that met CEBA eligibility criteria and are in good standing are eligible to receive forgiveness if the outstanding balance of the loan (other than the amount available to be forgiven) is repaid on or before January 18, 2024. Loan holders that were contacted by their financial institution in late 2022 informing them that they qualify for a repayment deadline of December 31, 2023 to qualify for partial loan forgiveness will now benefit from an extended repayment deadline of January 18, 2024 to qualify for partial loan forgiveness. Loan holders will be contacted in the coming months by their financial institution to confirm their eligibility for the January 18, 2024 repayment deadline to qualify for partial loan forgiveness.

If you have submitted a refinancing loan application to the financial institution that provided your CEBA loan by January 18, 2024 but require a grace period in order to finalize the payout of your CEBA loan, you can still qualify for partial loan forgiveness if the outstanding principal of your CEBA loan, other than the amount of potential debt forgiveness, plus any applicable interest is repaid by March 28, 2024.

For instructions on how to make a payment towards your CEBA loan, please contact your financial institution.

CEBA Extended Repayment Details

On October 11 2022, new details were released in respect of the extended repayment timeline for CEBA. Eligible borrowers in good standing can receive loan forgiveness if they pay the balance of their loan on or before December 31, 2023. Many of the questions and answers added direct the reader to their financial institution for specific answers. While few details have been provided by the financial institutions thus far, this may indicate that details and communications are soon to be released.

The following questions and answers have been added:

Am I eligible for the December 31, 2023 loan repayment extension?

Borrowers that met CEBA eligibility criteria and are in good standing are eligible for the December 31, 2023 loan repayment extension. If you qualify for the new extended term, your financial institution will contact you and provide details regarding the new repayment date.

CEBA eligibility criteria validations have been completed for all borrowers and the results of these validations are final. These validations were conducted in partnership with the Canada Revenue Agency (CRA) and revalidated periodically since the launch of CEBA in April 2020 to ensure an accurate reflection of the information in CRA records.

Who can I contact if I have questions about my repayment requirements?

For questions about your specific loan details (i.e., the loan balance, outstanding amount that must be repaid, acceptable methods of repayment, and terms of the loan) please contact your financial institution.

For questions regarding eligibility for the CEBA program and the final status of CEBA loan applications (i.e., final loan statuses, reasons for failed applications, and application history) you may call the CEBA Call Centre at 1-888-324-4201. The CEBA Call Centre is available Monday to Friday from 9AM to 6PM Eastern Standard Time, excluding statutory holidays.

How do I qualify for loan forgiveness?

Borrowers that met CEBA eligibility criteria and are in good standing are eligible to receive forgiveness if the outstanding balance of the loan (other than the amount available to be forgiven) is repaid on or before December 31, 2023. Please contact your financial institution for instructions on how to make a payment towards your CEBA loan.

CEBA eligibility criteria validations have been completed for all borrowers and the results of these validations are final. These validations were conducted in partnership with the Canada Revenue Agency (CRA) and revalidated periodically since the launch of CEBA in April 2020 to ensure an accurate reflection of the information in CRA records.

CEBA eligibility was determined based on the criteria established by the Government of Canada. No organization involved in administering the CEBA program has the authority to grant exceptions to these criteria, including your financial institution.

How can I determine the balance of my loan?

Please contact your financial institution for details regarding the balance of your CEBA loan.

How much of my CEBA loan do I have to repay?

Please refer to the repayment terms that you have received from your financial institution for details regarding your CEBA loan and associated forgiveness information. For any additional repayment information, please contact your financial institution.

How can I repay my loan?

Please contact your financial institution for instructions on how to make a payment towards your CEBA loan.

If I am about to close my business, do I still have to repay my CEBA loan?

Yes, all applicants that received funding through the CEBA program are required to repay their loan in accordance with the repayment terms of their respective loans. Please refer to the repayment terms provided to you by your financial institution for details regarding your repayment deadline and forgiveness of the loan. For all questions pertaining to the details of your loan (i.e., the loan balance, process for repayment, or other loan account details), please contact your financial institution.

What happens if I cannot repay my loan by the deadline provided in my repayment terms?

Borrowers that are not in good standing are in default of their CEBA loan. If this situation applies to you and you do not repay your loan by the deadline provided in the repayment terms provided by your financial institution, you will be contacted by your financial institution regarding next steps. Additionally, depending on the reason that your loan is not in good standing, you may not be entitled to receive loan forgiveness.

For borrowers that met CEBA eligibility criteria and are in good standing, if you do not repay your loan by December 31, 2023, you will not receive forgiveness. During the period of January 1, 2024 to December 31, 2025, you will be required to pay interest on your CEBA loan. For any additional information regarding interest applicable to your CEBA loan, please contact your financial institution.

What are the repayment terms if my business becomes insolvent or goes bankrupt?

Please contact your financial institution for further details on repayment and other loan terms.

What are the repayment terms if the owner of the business is now deceased?

Please contact your financial institution for further details on repayment and other loan terms.

How do I repay my CEBA loan if the ownership of my business has changed?

The impact of a change in ownership of the borrower on the repayment terms depends on the legal structure of the borrower (i.e., whether the business is a sole proprietor or a corporation). Please contact your financial institution for further details on repayment and other loan terms.

Does CEBA loan forgiveness need to be reported in my income tax filing? If so, when?

The forgiveness portion of your CEBA loan is taxable. For any other taxation questions relating to your CEBA loan, please contact the Canada Revenue Agency (CRA) or your accountant for further information.

Can I raise a dispute to change my repayment terms?

No. The CEBA Program is no longer providing a review, assessment or re-determination of a CEBA borrower’s eligibility status, final outcome or repayment term. As the application and funding periods for the CEBA Program have now closed, the opportunity for further resolution has now passed and applications will not be reconsidered by the CEBA Program.

CEBA - Tax Treatment

On March 2, 2022 CRA added the following Q & A in respect of CERB to the CEWS FAQ:

6-2.4 Is the CEBA loan taxable to the recipient? New: March 2, 2022

Only the forgivable portion of a CEBA loan is taxable and it is taxable in the year in which the loan is received. For example, if a business received a forgivable portion of $10,000 in 2020, they would include that amount as income for the 2020 tax year, regardless of the year they repaid their CEBA loan.

However, if the forgivable loan is received in respect of an outlay or expense that is made or incurred before the end of the taxation year following the year in which the loan is received, the recipient can elect to:

• Not include the forgivable loan amount in the income of the year in which the loan is received, and

• Reduce the outlay or expense deduction by the same amount.

Recipients that make this election must do so via a signed letter accompanying the income tax return for the year the forgivable loan is received or for the year the outlay or expense is made or incurred, whichever is later. For further information on how to elect to reduce the amount of an outlay or expense, see archived Interpretation Bulletin IT-273R2.

If the amount included in income (or not deducted as outlay or expense) is subsequently repaid as a result of a legal obligation to repay the amount, a deduction for the repayment can be obtained for the year in which the repayment is made. For example, if a business was unable to meet the December 31, 2023 deadline, and then later repaid the entire loan (including the forgivable portion) in 2024, they could obtain a deduction equal to the forgivable portion for the 2024 tax year.