Businesses that received interest-free loans under the Canada Emergency Business Account (CEBA) program now have until January 18, 2024 (previously December 31, 2023) to repay these loans to qualify for partial loan forgiveness. Borrowers who file a refinancing application with their financial institution by January 18, 2024 will have until March 28, 2024 to qualify for partial loan forgiveness. According to Finance, businesses that repay the balance of these loans on or before the new deadlines will receive loan forgiveness of up to a third of the value of the loans (i.e., up to $20,000). Businesses should contact the financial institution that provided their CEBA loan for instructions on how to make a payment towards their CEBA loan.
Finance also states that where businesses have outstanding loans on January 19, 2024, these loans would subsequently convert to three-year term loans, with interest of 5% per annum, and these loans will be due in full by December 31, 2026 (previously December 31, 2025).
Finance notes that these changes also apply to CEBA-equivalent lending through the Regional Relief and Recovery Fund.
Background
The government launched the CEBA program in 2020, to help support small businesses and not-for-profits finance certain expenses during the COVID-19 pandemic. Eligible businesses could apply for an interest-free loan of up to $60,000 under the CEBA program until June 30, 2021. The program provides that up to 33% of the loan is forgivable if the balance is repaid within a certain time. The loan recipient must include the forgivable portion of a CEBA loan in its taxable income in the year the loan is received, unless an election to reduce the amount of a related outlay or expense is filed. If the amount is subsequently repaid, the loan recipient can claim a deduction in the year of repayment.
For more information, contact your KPMG adviser.
Information is current to September 18, 2023. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500
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