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Not Able to Repay the CEBA Loan by January 18, 2024? LFS Can Help!

The CEBA (Canada Emergency Business Account) loan was meant to help businesses remain viable during the COVID-19 pandemic. Some businesses have repaid the loans and taken advantage of the loan’s partial forgiveness while others are struggling and wondering how they will repay by January 18, 2024.  This blog discusses the CEBA loan program and how LFS may be able to help those businesses who are finding themselves in the precarious position of not being able to repay the loan. 

In the early months of 2020, governments placed restrictions on businesses due to COVID-19.  Non-essential workplaces were closed while essential workplaces were allowed to stay open as long as they followed mandatory precautions.  Even though restrictions were eased as COVID-19 cases improved, over 60% of businesses reported a decline in revenues in 2020 relative to 2019.  Businesses in the accommodation and food services were most affected followed by entertainment, recreation and retail trade. 

In order to maintain stability in the economy and to protect against massive insolvencies, the federal government introduced policy measures to help businesses manage their cash flow.  One of these programs was the CEBA loan introduced in 2020. 

Initially, the interest-free CEBA loan was capped at $40,000, but as the pandemic dragged on and public health restrictions remained in place, a $20,000 extension was offered for a total of $60,000.  As long as the CEBA loan was repaid by December 31, 2022, businesses that received $40,000 would have $10,000 forgiven and those who received $60,000 could have $20,000 forgiven.  

As of September 14, 2023, the CEBA loan deadline has been extended to January 18, 2024.  Any loans not paid by January 18, 2024, will be converted to a non-amortizing term loan with full principal repayment due on December 31, 2026, at a rate of 5%.  

In total, the CEBA program provided $49 billion to nearly 900,000 mostly small or medium-sized businesses. 

The Canadian Federation of Independent Business (CFIB) stated that of the 98,000 CFIB members, 43% say they will not be in a position to repay the debt by the deadline due to less sales, debt, inflation, rising interest rates and rising salary expenses. 

For those businesses who wish to take advantage of the loan forgiveness portion but need some help to repay their CEBA loan by January 18, 2024, LFS can help by refinancing your existing or recently acquired equipment.  Refinancing equipment is used by businesses who wish to free up cash by using their existing paid for equipment as collateral.  Essentially, you are converting a portion of the equipment value into cash which can then be used to pay your CEBA loan or any other expense. 

By contacting LFS, we can advise you on how advantageous it is to refinance even if the interest rate is higher than the 5% that the federal government has mandated.

Call LFS today at 416-522-6556 to discuss your options!

For CEBA info