Financing Options – CEBA Loan

CAUTION!  CFIB continues to engage with government on the importance of allowing generous repayment terms on your CEBA loan. Don’t rush to refinance your CEBA loan - allow CFIB to continue to work with government to find a reasonable solution.  

As it stands, as of January 1, 2024, any CEBA loans that have not been repaid, will automatically become a 2-year term loan at 5% interest.

We’re hearing from many businesses that banks and other financial backers are reaching out with ‘great’ offers if they transfer their CEBA loan to them right now. We understand that every business has a different financial situation, and that some will need to look at moving now to ensure cash keeps flowing. Before entering into any repayment plan, consider the following forms of financing that may be available to you, and the considerations you should take before entering into any loan/repayment/loan extension program. Regarding business financing, be careful: usually, the easier it is to get the money, the more it will cost in interest payments over the long term:

1. Business Development Bank – BDC has a government mandate to give special consideration to small businesses looking for financing. The BDC can be more flexible than traditional lenders and offer a higher amount of financing.
2. Factors – These companies will lend money and have repayment based on a share of your future receivables. Companies who offer money in return for a percentage of the amount you put through your debit/credit machine fall in this category.  While lending can be quick, interest rates can approach/exceed 30% per annum.
3. Fintech/On-line lenders – Many such companies use on-line lending platforms.  Be careful.  Many are legitimate but the devil is in the detail of the contract signed.
4. Crowdfunding – Also on-line where a large pool of people are willing to give a person or business small amounts that can quickly add up.
5. Venture Capital/Angel Investors – Private persons or companies will loan/invest in small startups where the chance of growth is good but often require an equity stake in the business.  A business plan to show how you’re going to make money is a must.
6. Friends and Family – Often a family member will loan to another by taking an equity stake in the business, or on favourable financial terms.  Sometimes all you have to do is ask.
7. Credit Unions – CUs have consistently polled highly by CFIB members.  They often have a good sense of the local business environment and will lend where the big banks will not or cannot.  Financial officers are empowered at the local level to make lending decisions.

Regardless of where you get your financing you will be required to sign a contract. It is paramount that you understand what you are signing as it could be very costly to get out of the contract and may even involve litigation. 

Things to be aware of before signing:

• If you are not sure what your obligations are, get a lawyer to review the contract and advise you of any concerns.
• Check the contract for automatic renewal dates.
• Look for clauses that allow increases in interest rate without written notice.
• Check the term of the contract.
• Do not accept verbal changes. Make sure all changes are written into the contract. 

CFIB Advisors are available to help you work through your options when it comes to paying off your CEBA loan and can provide guidance on many other issues. Call 1-833-568-2342 or e-mail cfib@cfib.ca.