Affiliated Financial Services- Home
- CEBA loan
What is CEBA loan?
CEBA loan is a federal program that offered interest-free loans to small businesses impacted by the pandemic. It allows businesses to apply for loans of up to $60,000.
Have you benefited from a CEBA loan? Do you wish to take advantage of its early repayment benefits, including government forgiveness and interest avoidance.
As we approach January 18, 2024, we are here to guide you through the repayment process of the CEBA loan, which was made available by the government during the COVID-19 period.
By repaying your loan before the deadline, you can maximize the benefits offered by this exemption.
Repayment deadline
Originally set for December 31, 2022, the repayment deadline for CEBA loans has been extended by one year, until December 31, 2023. The repayment deadline was subsequently extended to January 18, 2024.
After January 18, 2024, if a CEBA loan is not repaid, interest at a rate of 5% per year will be applied until December 31, 2026, by which date the full capital must be repaid.
What forgiveness are available?
Loan of $40,000 and less
If your loan is $40,000 or less, you can receive a 25% debt reduction. This means that to benefit from this reduction, you must repay at least 75% of the remaining amount by January 18, 2024.
Loan between $40,000 to $60,000
If you took out a loan ranging from $40,000 to $60,000, you’re eligible for loan forgiveness of 25% on the initial $40,000 and 50% on the subsequent $20,000. For instance:
| If you borrowed | You must repay | To be forgiven |
|---|---|---|
| $40,000 | $30,000 | $10,000 |
| $30,000 | $22,500 | $7,500 |
| $20,000 | $15,000 | $5,000 |
| $10,000 | $7,500 | $2,500 |
| If you borrowed | You must repay | To be forgiven |
|---|---|---|
| $60,000 | $40,000 | $20,000 |
| $50,000 | $35,000 | $15,000 |
Can I refinance my CEBA loan with and AFS business loan?
Absolutely, you can use an AFS Business Loan to refinance your CEBA loan, and this is a smart strategy, especially if you do not have the funds to guarantee the portion of your loan eligible for a reduction. Of course, there will be interest charges associated with the new loan you obtain, but they are likely to be offset by the potential cancellation of the government loan, up to $20,000.
Additionally, you will avoid holding a balance under the CEBA program, which will start accumulating interest at a rate of 5% per year, payable monthly starting in January 2024.
2 examples of scenario
1. **Sarah and Nick** need to pay off their $40,000 CEBA loan, but are unable to pay the full amount in time to benefit from $10,000 in partial loan forgiveness. On January 19, 2024, their loan converts to a three-year term loan with five per cent interest per year. They will make monthly interest payments of around $167 per month, and will only be required to pay their principal amount just before the term loan repayment deadline of December 31, 2026.
2. **Doug** applies for $40,000 in financing from the bank that provided his CEBA loan to pay off his $60,000 CEBA loan. He is unable to receive a response to his refinancing application by January 18, 2024. However, with the new refinancing extension, he has until March 28, 2024, to hear back from his bank and secure new financing to pay off his CEBA loan and benefit from $20,000 in partial loan forgiveness.
How can Affiliated Financial Services assist you?
If you need financing to take advantage of the maximum loan reduction, AFS can assist you:
- Unlock up to $60,000 right now.
- Choose flexible repayment terms over a period of 4 to 24 months.
- Repay your CEBA loan.
- Invest in the growth of your business.
Does this sound interesting to you? Simply fill out our form to be quickly connected with a financing expert.
