By Heather Thomson, Vice-President, Strategy, Research and Engagement 

The Canada Emergency Business Account (CEBA) program has ended – but for many business owners the CEBA headaches remain. So, I’d like to take this opportunity to update our members on what’s going on with CEBA.

Yes, the deadline for repaying the CEBA loan was Jan. 18. If you were able to meet the deadline, repay your loan, and enjoy the “partial loan forgiveness” of up to $20,000, I congratulate you and have to say I am more than a little happy for you.

If, however, you were unable to repay the loan – and about 25 per cent of businesses fall into that category – there is some light at the end of the tunnel, depending on your circumstances.
It gets complicated but I will try my best to make a government program sound reasonably simple.

I have two warnings off the top: I am neither a lawyer nor a banker, so what I have to say is neither legal advice nor financial guidance. Always refer to your own lawyer and/or financial institution as to what’s best for you.

My other bit of advice: be careful what website you visit for official information on the CEBA program. The official government website is https://ceba-cuec.ca. There is a similarly named website at ceba.ca that is a private website that offers to put you in contact with a lending institution to repay the loan.

For those of you that have yet to repay your CEBA loan, the government has placed you in two categories: those that are deemed “eligible” and those deemed “ineligible.”

The eligible businesses are those that, upon review, have met all the requirements to receive the CEBA loan. The ineligible businesses are those that, upon review, have failed to meet the requirements and should not have received the CEBA loan in the first place. Understandably, those deemed eligible by the government are in a better situation than those deemed ineligible.

In fact, the eligible businesses have another chance to repay the loan and still receive the partial loan forgiveness. If you applied for a loan with the lending institution that initially handled your CEBA application, you still have until March 28 of this year to repay the loan and reap the “free" money. But this only works if you applied for the loan before the Jan. 18 deadline.

There is still a glimmer of good news even if you cannot pay the loan next month. As an eligible business, you will have almost three years to repay the loan at a five per cent interest rate. The interest, by the way, began accumulating on Jan. 19, one day after the repayment deadline.

It is important to keep in mind you need only pay the interest each month, not the principal. The principal, though, will have to be paid by Dec. 31, 2026. For those deemed ineligible, the payment deadline for the CEBA loan was Dec. 31, 2023.

This is where it gets tricky for these businesses. And confusing. If you are in this boat, you will have up to two years to repay the loan (to Dec. 31, 2025). Even though you will enjoy a five per cent interest rate starting Jan. 19, there is no guarantee that rate will continue.

As a business deemed ineligible, you will have to negotiate a repayment schedule. The federal government’s web page points out you may be able to receive “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”.

The Canadian Federation of Independent Business (CFIB) has called on the government to review those cases deemed to be ineligible if the businesses applied in good faith but, for example, made a mistake in the application. The CFIB is urging businesses to lobby their local Member of Parliament for help.

The federal government, though, is not reviewing the eligibility issue because it says businesses were contacted multiple times during the CEBA period to confirm the accuracy of the applications. The CFIB would also like the five-per-cent/three-year-deal to apply to those deemed ineligible. But, again, the government seems firmly set in its terms for repayment.

Here is my advice to businesses, particularly those classified as ineligible, having trouble repaying the CEBA loan: do not panic. Don’t rush into a predatory repayment plan with a lending institution. The CFIB has heard of desperate businesses entering schemes with high-interest rates.

Look carefully at your options. Talk with the lending institution that handled your initial CEBA loan application. The federal government is offering “appropriate leniency” and “repayment flexibilities.” Vague terms, I know, but they may provide some relief.

For many, CEBA was not just welcome but crucial. Almost 900,000 businesses received a CEBA loan of up to $60,000 to help them survive the pandemic. An estimated 75 per cent have repaid their loan. We don’t have reliable numbers but a significant number is believed to have taken out a loan with a lending institution to pay back the money before the Jan. 18 deadline so they could reap the partial loan forgiveness. Even though they paid the government back, the reality is they are still handling a debt related to CEBA. About 50,000 businesses were declared “ineligible” by the government and are now entering uncharted waters to repay their money. It is a complicated time for many businesses.

Again, avoid panic, be careful where you get your information, and investigate your options.