Today, the government announced that the repayment deadline for CEBA loans to qualify for partial loan forgiveness is being extended from December 31, 2022, to December 31, 2023, for all eligible borrowers in good standing.
Repayment on or before the new deadline of December 31, 2023, will result in loan forgiveness.
Outstanding loans would subsequently convert to two-year term loans with interest of five per cent per annum commencing on January 1, 2024, with the loans fully due by December 31, 2025.
The government also announced that the repayment deadline to qualify for partial forgiveness for CEBA-equivalent lending through the Regional Relief and Recovery Fund is extended to December 31, 2023.
What are the terms of the forgiveness?
All applicants that meet CEBA eligibility criteria will have the following terms of forgiveness:
If you borrowed $40,000 or less:
Repaying the outstanding balance of the loan (other than the amount available to be forgiven) on or before December 31, 2023 will result in loan forgiveness of 25 percent (up to $10,000).
Example 1:
Maximum Amount Borrowed: $40,000
Amount Repaid By December 31, 2023: $30,000
Available Forgiveness: $10,000
Example 2:
Maximum Amount Borrowed: $20,000
Amount Repaid By December 31, 2023: $15,000
Available Forgiveness: $5,000
Example 3:
Maximum Amount Borrowed: $40,000
Amount Repaid By December 31, 2023: $25,000
Available Forgiveness: $0
If you borrowed more than $40,000 and up to $60,000:
If you received a $40,000 loan and subsequently received the $20,000 expansion, the terms of your forgiveness have changed and are described here.
Repaying the outstanding balance of the loan (other than the amount available to be forgiven) on or before December 31, 2023 will result in a single tranche of loan forgiveness up to $20,000 based on a blended rate:
· 25 percent on the first $40,000; plus
· 50 percent on amounts above $40,000 and up to $60,000.
For clarity, the portion of forgiveness based on a rate of 25% and the portion of forgiveness based on a rate of 50% are combined into a single tranche of forgiveness, which is only available if all other amounts outstanding are repaid by December 31, 2023. For example, if $60,000 is borrowed, no forgiveness is available unless $40,000 is repaid.
Note: some financial institutions may record your $40,000 loan and $20,000 expansion as two separate loans. For the purposes of loan forgiveness, borrowings and repayments on both loans will be aggregated.
Example 4:
Maximum Amount Borrowed: $60,000
Amount Repaid By December 31, 2023: $40,000
Available Forgiveness: $20,000 ($40,000 x 25% + $20,000 x 50%)
Example 5:
Maximum Amount Borrowed: $50,000
Amount Repaid By December 31, 2023: $35,000
Available Forgiveness: $15,000 ($40,000 x 25% + $10,000 x 50%)
Example 6:
Maximum Amount Borrowed: $60,000
Amount Repaid By December 31, 2023: $35,000
Available Forgiveness: $0
If you fully repaid your original $40,000 loan, claimed forgiveness, and thereafter received the $20,000 expansion:
Repaying the outstanding balance of the $20,000 expansion (other than the amount available to be forgiven) on or before December 31, 2023 will result in loan forgiveness of 50 percent (up to $10,000).
Example 7:
Maximum amount Borrowed: $20,000
Amount Repaid By December 31, 2023: $10,000
Available Forgiveness: $10,000
Example 8:
Maximum amount Borrowed: $20,000
Amount Repaid By December 31, 2023: $8,000
Available Forgiveness: $0