Businesses now have 18 more days to pay back their pandemic loans and qualify for partial loan forgiveness, the federal government announced last week.
Instead of having to repay their Canada Emergency Business Account loans by this Dec. 31, in order to qualify for partial loan forgiveness of up to a third, businesses now have until Jan. 18, next year.
That deadline also applies for businesses that want to refinance their loans for repayment by March 28, and thus qualify for loan forgiveness.
As well, as of next Jan. 19, all outstanding CEBA loans will be converted to three-year terms, at an interest rate of five per cent per year.
The repayment date for paying back the entire loan will also be extended from Dec. 31, 2025, to Dec. 31, 2026.
The extra time will help small businesses who are still facing several challenges stemming from the COVID pandemic that ravaged the world in 2020 – 2021.
The extension to 2024 to repay the non-forgivable portion of the CEBA loans will allow many additional businesses to continue to operate and benefit from the forgivable loan portion of up to $20,000, said Jill McKnight, executive director of the Delta Chamber of Commerce.
“Additionally, this extension will allow local businesses to create a repayment plan which can be executed over the next 16 months to ensure they keep the forgivable portion while accounting for the ever-increasing costs of doing business,” McKnight said on the chamber website.
Repayment on or before the new deadline of Jan. 18, 2024 will result in loan forgiveness of $10,000 for a $40,000 loan and $20,000 for a $60,000 loan, the chamber explained.
“With this immediate extension in place, now is the time to start crafting a long-term strategy for those industries where recovery may not be as imminent as others,” McKnight said.
Next year, will be a time of uncertainty as businesses adapt to high inflation rates, high interest rates, increasing labour costs, renewal of commercial leases, remaining supply chain disruptions and a softening of consumer spending, she added.
Canada Emergency Business Account loans were available from April 9, 2020, to June 30, 2021, and provided $49 billion in interest-free, partially forgivable loans of up to $60,000, to nearly 900,000 small businesses and not-for-profits to help cover their operating costs during the pandemic, said the Department of Finance Canada.