What you need to know about your CEBA loan moving forward

The deadline to keep the forgivable portion of the loan was January 18th, 2024.

If you applied for a refinancing loan on or before January 18th, 2024, with the Financial Institution (FI) that provided your CEBA, you qualify for a special extension to March 28, 2024, to keep the forgivable portion. Here are some important details on how this works:

There is no standard documentation requirement to prove you applied for refinancing on or before January 18, 2024. The federal government is allowing each bank to determine its own process so check with yours.
While you needed to apply for a refinancing loan with the bank that issued your CEBA loan to qualify for an extension, you do not need to take that loan and are permitted to find alternative sources of funding before the March 28, 2024, deadline. Follow-up with your FI to confirm your access to the March 28, 2024, deadline.
If you are rejected for refinancing or denied the opportunity to apply for refinancing from your CEBA bank, you can still qualify for the extension to March 28, 2024, as long as your account is in good standing and your FI confirms your access to the March 28th deadline
Ensure you receive any decisions from your bank in writing so you can demonstrate that you applied for financing on or before January 18.
During this special extension period, starting January 19, 2024, 5% interest will be charged on the outstanding amount of your CEBA including the forgivable portion.

If you didn’t have the capacity to repay or borrow to repay your loan, consider how you will repay the larger amount on or before December 31, 2026: If you didn’t receive the extension to March 28, 2024 from your bank, you have lost the forgivable portion, but your CEBA will convert to a term loan with a that can be repaid over 3 years (to the end of 2026). In addition, businesses will only be required to pay monthly 5% interest payments on the full outstanding balance of your CEBA (including the forgivable portion) and can pay the principal amount just before the term loan repayment deadline of December 31, 2026.

If your business has been deemed ineligible for CEBA, you do not qualify for the extension to January 18, 2024. Over 50,000 small businesses that received and spent CEBA loans during the pandemic have now been deemed ineligible for the loan in the first place. If deemed ineligible, the business does not benefit from the forgivable portion nor do they qualify for the extensions to January 18 or March 28, 2024. CFIB regards this as deeply unfair, especially as government has closed the process that allowed businesses to have their file reviewed or reconsidered. CFIB continues to advocate government for an extra year and a process to review files with minor errors to protect the forgivable portion. If your business was deemed ineligible:

Your deadline to repay the loan in full was December 31, 2023.
Starting January 19, 2024, you will be charged 5% interest on the full outstanding amount of your CEBA including the forgivable portion.
The Canada Revenue Agency will begin contacting ineligible businesses in the spring of 2024 to collect from those who haven’t repaid.
Government will assess repayment arrangements on a case-by-case basis. They have shared that there will be:
- no penalties, and
- based on your ability to repay, could offer repayment flexibilities of up to a 2-year repayment period. 
If you are unsure as to why you are ineligible, please call the CEBA call centre at 1-888-324-4201 and your Financial Institution to get clarity. If you have a situation that you would like CFIB to highlight in our advocacy, please send us an email at CEBA@cfib.ca.

If you need help, get in touch with us: 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. Give us a call at 1-833-568-2342 or reach out to us by email at cfib@cfib.ca.

Refinancing options

Savings – Review your own savings to see if you have some or all of the funds to pay back CEBA.
Credit - do you have a line of credit? 20% of businesses reported using existing available credit to repay the CEBA loan. If you don’t currently have a line of credit, you may find this to be a better option than a loan as it provides more flexible repayment terms. A line of credit may also be easier to manage if the government decides to extend the CEBA deadline.
Credit Unions – Credit Unions have consistently polled well with 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.
Banks/Financial institutions – Speak to the bank with which you have a CEBA loan and have a history with. If you can show them that you have had a good record of on-time payment, they may be willing to work with you on a refinancing plan.
Community Futures/Community Business Development Corporations – Local CFs/CBDCs are often a last resort lender to businesses that can show they have a viable plan to recover and repay the loan. CF/CBDCs invest in their local businesses and often are more patient and communicative with small businesses. They try their best to work with businesses and avoid collections agencies.
Friends and family - Often a family member or friend might be willing to help by providing the funds you may need. They may be willing to take an equity stake in the business, or provide more favourable financial terms than you would get at any bank. Sometimes all you have to do is ask.
Business Development Bank of Canada – BDC has a mandate to help small businesses looking for financing. The BDC can be more flexible than traditional lenders and offer a higher amount of financing. However, they also tend to have higher interest rates as they are more willing to take on riskier loans.
Crowdfunding – On-line portals where a large pool of people are willing to give a person or business small amounts of money to support their business/cause. These small amounts can quickly add up.
Venture Capital/Angel Investors – Private persons or companies that will loan/invest in small business/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.
Factor financing – These companies will lend money and have repayment plans 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 card machine fall in this category. While lending can be quick, interest rates can approach/exceed 30% per annum.
Fintech/Online lenders – Many such companies use online lending platforms. Be careful. Many are legitimate but the devil is in the detail of the contract signed and they tend to charge higher interest rates.

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 email cfib@cfib.ca.

How to assess the state of your business

Below we’ve listed items to help you monitor the financial health of your business and better allow you to determine next steps. A small business can view its financial situation by conducting a thorough analysis of its financial statements, tracking key performance indicators (KPIs), and assessing various aspects of its operations. 

Financial Statements Analysis:

Balance Sheet – A balance sheet reviews a company's assets, liabilities, and equity. This provides an overview of the business's financial position at a specific point in time.
Income Statement – Also known as a profit and loss statement, this summarizes revenues, expenses, and net income over a specific period. This helps determine profitability.
Cash Flow Statement – Used to understand how cash is flowing in and out of the business. This is essential for assessing liquidity and cash management.

Key Performance Indicators (KPIs)

Identify and track KPIs relevant to the business's industry and goals. Common KPIs include revenue growth, gross profit margin, net profit margin, inventory turnover, and customer acquisition cost (how much a business spends to gain new customers).
Regularly monitor these KPIs to gauge the business's performance and financial health.

Budget and Forecast

Create a budget or financial forecast to project future income, expenses, and cash flow. This helps in setting financial goals and tracking progress toward them.

Debt and Liabilities Assessment

Evaluate the business's outstanding debts and liabilities. Know when debts are due and what the repayment terms are; this helps in managing debt obligations. Keep track of tax obligations and consider tax planning strategies to minimize tax liabilities.

Revenue Analysis

Analyze the sources of revenue and customer demographics. Identify which products or services are most profitable and which may need adjustments.

Cost Control

Review all expenses and identify areas where cost control measures can be implemented - reducing unnecessary costs can improve profitability.

Inventory and Asset Management

Assess inventory levels and asset utilization. Ensure that inventory turnover is efficient, and assets are being used optimally.

Cash Flow Management

Pay attention to cash flow cycles and ensure that the business has enough working capital to cover operational expenses.

Seek Professional Help

Consider consulting with an accountant or financial advisor who can provide expertise in financial analysis and planning.

Regular Reporting

Establish a routine for financial reporting, both internally and externally if required, to keep stakeholders informed about the business's financial performance.

Do you have a turnaround plan?

What is your situation, problem, actions, what do you still have to do?

Have you reviewed your financial statements?
Can you show positive cash flow?
Do you have cash flow forecasts?
Do you have a history with debt?
What are your average accounts receivables?
What other debts do you hold – what are the interest and priority or negotiability of those loans? Are there personal guarantees?

January 22, 2024

What you need to know about your CEBA loan moving forward