CEBA loans: what brokers need to know before December 31, 2026
This program is closed. The Canada Emergency Business Account (CEBA) stopped accepting applications on June 30, 2021, and the forgiveness window ended in early 2024. Any balance still outstanding is due in full on December 31, 2026. To see financing that clients can use today, go to active loan types.
Table of contents
What clients owe now
If a client did not repay by the forgiveness deadline, the balance became a term loan at 5% interest per year, starting January 19, 2024. Most lenders collect interest only each month. The full principal is due December 31, 2026, and there is no penalty for paying early.
A client holding the full $60,000 owes about $250 a month in interest, then $60,000 at once. Many owners have not planned for that final payment. This is where a broker helps.
How brokers can help a client with a CEBA balance
- Ask every Canadian client if they still hold a CEBA balance. Many forget it is there.
- Size the payout early. Lenders need time, and December is slow.
- Match the structure to the business. A business term loan spreads the payout over one to five years. A business line of credit suits clients who can clear it within months.
- Package it once. In Levr, a broker collects the client file one time and reviews the lenders that fit.
How CEBA used to work
CEBA was a government program introduced by the Canadian government in response to the COVID-19 pandemic to provide financial support (through loans) to eligible Canadian small and medium businesses. It offered interest-free loans of up to $60,000 to help small businesses cover their operating costs during the economic downturn caused by the COVID-19 pandemic.
CEBA is administered by Export Development Canada (EDC), which worked closely with Canadian financial institutions to deliver the loans to their existing business banking customers.
CEBA loans were easily available through over 220 Canadian financial institutions in partnership with the Canadian government, CRA and EDC.
The loans are partially forgivable if certain conditions are met, making it a form of financial assistance for qualifying businesses in Canada. Continue reading to learn more about loan-forgiveness options available to small businesses that hold CEBA loans.
What role does Export Development Canada (EDC) play in Canada?
For some small businesses that only did business on Canadian soil before COVID-19, often they were not familiar, or interacted, with Export Development Canada (EDC). Since the inception and availability of CEBA loansβthat has changed.
The EDC plays a crucial role in Canada’s international trade and business landscape. As the country’s export credit agency, EDC’s primary mission is to support Canadian businesses in their efforts to succeed globally.
Some of the key roles and functions of Export Development Canada (EDC):
- Export financing
- Export credit insurance
- Market knowledge and research
- Trade risk management
- Foreign investment support
- Access to capital (like CEBA loans)
- Small and medium-sized enterprises (SME) support
Overall, EDC plays a vital role in promoting and strengthening Canada’s position in international trade. By supporting Canadian businesses in their export and foreign investment activities, EDC contributes to economic growth, job creation, and the country’s competitiveness on the global stage.
Are CEBA loans interest-free?
Yes, the CEBA loans are indeed interest-free, offering a ray of light and relief to small business owners during the challenging times brought forth by the COVID-19 pandemic. This compassionate decision by the Canadian government aimed to ease the burden on entrepreneurs and provide them with much-needed financial support without the additional weight of interest charges.
The interest-free nature of the CEBA loans represented more than just a financial advantage. It symbolized empathy, understanding, and a genuine desire to uplift small businesses during their darkest moments. It was a lifeline extended with a warm embrace, a gesture that acknowledged the hardships faced by entrepreneurs and sought to alleviate their worries.
By eliminating the burden of interest, the government sent a powerful message of solidarity. The absence of interest charges reflected a deep understanding of the emotional toll that financial stress can take.
However, any outstanding balance owed by businesses on a CEBA loan beyond the new deadline of December 31, 2023 will be converted to a 2-year term loan at 5 percent interest per annum.
The CEBA programme has ended. If you are refinancing converted CEBA debt, a business term loan is usually the closest equivalent. See current financing options or read how Levr works.
Can a business still apply for a CEBA loan?
No. Applications closed on June 30, 2021, and no new CEBA funding is available. Clients who need capital today can look at a business term loan, a line of credit, or the other active loan types.
Active programs to look at instead
- Business term loans
- Business lines of credit
- SR&ED financing for Canadian companies doing R&D
- Grant and tax credit financing
What were CEBA loan eligibility requirements?
- Is a Canadian operating business, and has been operating as of March 1, 2020.
- Applicant has a CRA federal tax registration for the business.
- Employment income paid in the 2019 calendar year was between $20,000 and $1,500,000.
- Businesses with $20,000 or less in employment income (2019) must:
- Have a CRA business number and filed a 2018 or 2019 tax return.
- Eligible non-deferrable expenses between $40,000 and $1,500,000. Those eligible non-deferrable expenses couldβve included costs such as rent, property taxes, utilities, and insurance. Expenses were subject to verification and audit by the Government of Canada.
- An active business chequing bank account with the financial institution that extended the CEBA loan, and was the businesses primary financial institution.Β
- Account was opened on or prior to March 1, 2020 and was not in arrears on existing debt/loans.
What businesses are excluded from the CEBA loan program?
- The business taking a CEBA loan could not be a government organization or body, or an entity owned by a government organization or body.
- Applicants could not have been a union, charitable, religious or fraternal organization or entity owned by such an organization or if it is, it is a registered T2 or T3010 corporation that generates a portion of its revenue from the sales of goods or services.
- The business could not have been owned by any Federal Member of Parliament or Senator.
- The business cannot promote violence, incite hatred or discriminate on the basis of sex, gender identity or expression, sexual orientation, colour, race, ethnic or national origin, religion, age, or mental or physical disability, contrary to applicable laws.
How much did the Canadian government loan to small businesses via CEBA loans?
CEBA loans provided much-needed financial relief during the tumultuous times of the COVID-19 pandemic.Β
In total, the Canadian government offered up to $60,000 through the CEBA program. Any small businesses that opted for only $40,000 in funding were able to apply for an additional $20,000 of financing through the CEBA program. Nearly 600,000 businesses took advantage of this extension under the CEBA program.
This injection of funds aimed to help small businesses stay afloat, preserve jobs, and navigate the stormy economic waters caused by the pandemic.Β
The Canadian government has provided great transparency on the CEBA program statistics stating it had approved CEBA loans for 898,271 Canadian businesses. CEBA loans totaled $49.2 Billion of approved funds, this money injected into the Canadian economy for small businesses to survive and thrive pre and post COVID-19 pandemic.Β
From a regional perspective businesses located in the province of Ontario received the most funding of nearly $20 Billion across 360,339 loans. Second was the province of Quebec, with $10 Billion funded across 182,923 loans. In third, the province of Alberta with roughly $7 Billion funded across about 125 thousand small businesses. For a complete breakdown of CEBA loans by Canadian provinces visit the Canadian government website.Β
CEBA summary data as of January 26, 2022 (modified April 24, 2023)
1Β βCEBA loansβ refer to $40,000 and $60,000 loans; βCEBA expansionsβ refer to $20,000 expansions provided to businesses with an existing CEBA loan
2Β Funding approved by the Government of Canada may take up to 2 business days to be disbursed to CEBA applicants
3Β Total excludes CEBA loans where applicants and/or Financial institutions have not provided provincial or territorial information
This financial support meant more than just numbers on a balance sheet. It allowed small business owners to continue paying their dedicated employees, covering rent and utilities, and meeting other essential expenses. It helped maintain the vibrancy of local CanadianΒ communities.
The Canadian government’s decision to lend a helping hand to small businesses through the CEBA loans showcased the profound understanding of the human stories behind these ventures. It recognized the tireless efforts, sacrifices, and dreams of countless entrepreneurs who pour their hearts and souls into their businesses.
Key CEBA dates
- April 9, 2020: the program opens.
- June 30, 2021: applications close.
- January 18, 2024: forgiveness deadline. The interest free period ends.
- March 28, 2024: extended forgiveness deadline for businesses that applied to refinance with their CEBA lender.
- December 31, 2026: final repayment date for all balances.
Why the repayment date moved
CEBA loans were first due on December 31, 2022. The government moved the forgiveness deadline to December 31, 2023, and then to January 18, 2024. Balances left after that date became three year term loans at 5% interest, due December 31, 2026.
How CEBA forgiveness worked
Forgiveness is no longer available. While it ran, the government forgave up to 33% of a CEBA loan, to a maximum of $20,000, when the rest was repaid on time. That meant 25% of the first $40,000 and 50% of the $20,000 expansion. The last deadline was January 18, 2024, or March 28, 2024 for businesses that applied to refinance with their CEBA lender.
What if I already repaid my first CEBA loan?
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).
How do I find the balance owed on my CEBA loan?
If you contact your financial institution that provided the funds you will be able to know the balance owing on your CEBA loan.Β
The Canadian government worked with over 200 financial institutions to distribute CEBA loans. It was encouraged to work with an institution that you also did everyday business banking with for the business, itβs likely your usual business banking institution.
Options for a client who cannot repay by December 31, 2026
- Refinance the balance. There is no penalty for early repayment, so a new term loan or line of credit can pay CEBA out and spread the cost over a longer period.
- Pay it down in stages. Most lenders accept extra principal payments before the deadline, which makes the final payment smaller.
- Talk to the CEBA lender early. The bank or credit union that issued the loan can confirm the exact balance and what happens after the deadline.
- Get professional advice. A client who cannot repay or refinance should speak with an accountant or a licensed insolvency trustee before December 31, 2026. An unpaid balance is in default after that date and can be sent to collections.
If you have more questions about your CEBA loan,Β available is the CEBA Call Centre at 1-888-324-4201 operated by the Canadian government. The CEBA Call Centre is available Monday to Friday from 9AM to 6PM Eastern Standard Time (EST), excluding statutory holidays.
Levr.ai can help take the pain out of finding the RIGHT financing optional for your business to get what it needs fast, and keeps your business growing.Β
Now that you have a better understanding of the ins and outs of CEBA loans, itβs important to review all your options. If you have experience applying for a business loan (really any kind of business loan) you will already know the work involved can be time-consuming.
Levr.ai is designed to make this process easier, faster, and more straightforward. A safe and secure platform allows you to collaborate with the key members of your team i.e. accounting, financial planner, and business operators to organize all the required financial statements and necessary business forecasts, plans, and documents. Having everything in one place makes it easier to apply with multiple lenders to secure the rates and loan repayment terms that are best for your business.
In addition to making the process of getting a loan better, Levr.aiβs free loans marketplace allows you to review options and compare offers from multiple lenders based on what is right for you and what allows you to achieve your growth goals.
Levr.ai also can negotiate exclusive loan rates with its expert team of certified financial advisors and loan industry partnerships.
To learn more about Levr.ai and business term loan options in the free loans marketplace, create a free account today.
Important information:Β Levr.ai provides financial education services in the form of blogs, posts, templates, and support documents and are intended to inform and educate readers on various financial topics, including but not limited to budgeting, investing, and small business finance. Levr.aiβs website and/or blogs etc. (mentioned above) are not to be confused with a certified accountant or financial advisor, and the information provided should not be construed as professional advice.
Clients are solely responsible for their financial decisions and actions, and Levr.ai is not liable for any damages or losses that may result from such decisions or actions. The information provided is general in nature and may not be suitable for all individuals or situations.
Clients are encouraged to seek the advice of a certified accountant or financial advisor for specific financial advice tailored to their individual circumstances. Levr.ai does not endorse any specific financial products or services and is not responsible for any third-party information or links provided.
By using Levr.ai’s financial education tools, clients acknowledge and accept these terms and any conditions of liability. For more additional information about ourΒ Terms of ServiceΒ orΒ Privacy PolicyΒ click the respective embedded links or navigate to our website footer.
