Please note that Merchant Growth’s Canada Emergency Business Account (CEBA) Refinancing Program has now ended and the forgiveness incentive deadline has now passed. Businesses who have not yet paid back their CEBA loans have until December 31, 2026 to do so.
The pandemic brought about a great deal of uncertainty and stress, particularly for small business owners in Canada. Luckily, the Canadian Emergency Business Account (CEBA) program provided some relief and stability during those exceptionally challenging times.
On December 4, 2020, business owners were granted an increase on their original $40,000 CEBA loan. They received an additional $20,000. Now that the loan is coming due soon, the federal government is providing a further economic benefit to small businesses; a loan forgiveness benefit of up to 33% of the loan – so long as it’s paid back by March 28, 2024 for businesses that previously made a refinancing attempt with the financial institution that provided their CEBA loan by January 18, 2024.
The question now is: How can small business owners repay their CEBA loan with little cash on hand or limited ability to borrow?
Merchant Growth financial experts provide a breakdown of the CEBA loan, its forgiveness benefit, and how you can repay the loan with the help of our CEBA Refinance program.
What is the Canada Emergency Business Account (CEBA) Program?
In the first year of the pandemic, the government of Canada enacted a COVID-19 Economic Response Plan that provided over 750,000 Canadian businesses with interest-free loans through the CEBA program. The purpose of CEBA was to provide eligible businesses with the means to pay for:
- Operating expenses,
- Payroll; and
- Other non-deferrable expenses.
In October 2020, the government announced that it was joining forces with Export Development Canada (EDC) and financial institutions to expand the program to allow for an interest-free CEBA loan amount of $20,000 with loan forgiveness.
CEBA Loan Repayment Terms
Before jumping into repaying the loan, it’s important to review the terms. Businesses who received a $40,000 (or $60,000 CEBA loan with the additional $20,000) and who repay the balance by March 28, 2024 (as long as they made a refinancing attempt with the financial institution that provided their CEBA loan by January 18, 2024) will gain loan forgiveness of up to 33%.
Each CEBA loan has a forgiveness amount based on the total amount a small business received ($40,000 or $60,000):
- Up to $10,000 loan forgiveness is available on eligible CEBA loans advanced for $40,000, provided $30,000 is paid back prior to January 18, 2024 (March 28th for qualifying businesses).
- Up to $20,000 loan forgiveness is available on eligible CEBA loans advanced for $60,000, provided $40,000 is paid back prior to January 18, 2024 (March 28th for qualifying businesses).
Note that as of January 19, 2024, there is a 5% annual interest charged to the remaining balance. Only interest payments are required to be paid monthly, with the outstanding principal due by December 31, 2026. Businesses looking to take advantage of the March 28th extension are still responsible for paying interest.
Making the CEBA loan repayment may be difficult for your small business, depending on how things go during this unique and uncertain time. If that’s the case, Merchant Growth can create a structured and customized payment plan to help you pay off your CEBA loan amount by the March 28th deadline, thereby benefiting from the forgiveness program
Options for Repaying a CEBA Loan
If a small business owner would like to repay their CEBA loans, there are a few different routes that can be taken. In all cases to qualify for the forgiveness extension businesses have to have made a refinancing attempt with the institution that holds their CEBA loan by January 18th.
Use Available Funds
For businesses that have the available funds to pay back their loan, this is certainly an option. However, given the value of the amount that needs to be repaid, this could cause a significant shortfall to the business’ cash flow, that could otherwise be used for other business expenses.
Use a Traditional Financial Institution
While this may be a good fit for certain small business owners, given the overall volume of small business owners who need to pay back the loans, and the corresponding surge in demand, while some businesses were able to secure refinancing via a bank prior to January 18th, there remains a large volume of businesses unable to secure funds this way. Banks still have more rigid eligibility requirements as they do with other types of business financing, and they simply were not be able to approve or fund all applicants.
Use an Alternative Lender
Refinancing your CEBA loan with a company such as Merchant Growth allows you to take advantage of the forgiveness program, in particular for businesses that were unable to secure bank funding, all while avoid the long waiting times from the banks for a credit decision when it comes to applying and receiving funds.
Merchant Growth’s CEBA Refi Program: Here to Support Businesses
At Merchant Growth, our goal is to help as many businesses as we can take advantage of the forgiveness incentive. Because we understand that the $20,000 forgiveness incentive can have a real impact on the longterm success of a business, in particular those that operate with thin margins.
That’s why we’ve been regular advocates for awareness for non-bank lenders to ensure businesses are aware of al the options available to them, in particular with $20K on the line and a strict deadline last approaching. We’ve already been able to support thousands of businesses ensure they do not miss out on the forgiveness incentive, and for those that are eligible for the deadline extension, we invite you to get in touch and take advance of the savings being offered by the government.
Learn more about the experience of businesses’s that have refinanced their CEBA loan with us.
The Merchant Growth Experience
At Merchant Growth, we believe that getting funding should not take away from actually running your business, and this is a principle that is also fundamental to our CEBA Refinancing program.
That’s why we offer a fully self-served, online application where you can fill out your personal and business information, confirm your identity, and be presented with the offers available to you all in a single process. However, should you have any questions, concerns, or issues come up as you are applying, our team is here to help you.
If you’re ready to move ahead with applying, to have the process go as smoothly as possible you should have the following information on hand:
- Personal information (name, address, etc.)
- Business information (name, legal name, time in businesses, address, revenue)
- Information about your CEBA loan (what institution it is held with, amount, amount paid back)
- Digital copies of bank statements from the past 6 months
- Piece of government-issued photo ID (besides a passport)
During the application process you’ll be presented with three different offers that you can choose from that best meet your needs.
Join Merchant Growth’s CEBA Refinance Program
Eligible CEBA small businesses can apply for our CEBA Refinance program, aka “CEBA Refi”. It lets you:
- Benefit from the CEBA loan repayment forgiveness offered by the government.
- Have a much lower principle & interest cost compared to the federal government’s principle and interest paid over two years.
- Have the proceeds automatically paid into your CEBA institution.
- Make automatic daily or weekly payments.
Contact us to learn more!
