What to do about the January 18, 2024 CEBA deadline

The January 18, 2024 CEBA extension deadline is fast approaching, and if you took the CEBA loan, you need to make sure you're compliant with the deadlines. With less than two weeks to go to the deadline, now is the time to decide the best course of action for your business.

You can read more about the CEBA loan at the CRA's website here.

Option 1: Pay it All Off

If you are able to make the full payment of the CEBA by the January 18, 2024 deadline, then that could be the best option. This way, you won't have to worry about any potential loan interest or penalties due to non-compliance. But you really need to consider how this will affect your cash flow. I what you should be doing is preparing a cash flow forecast to determine if you’re able to pay down the loan. If certain things need to occur in order for you to be able to pay down the loan, then option 2 might be the better option. 

Option 2: Take the Loan

If you can't make the full payment by the deadline, then taking out a loan to cover the cost of the CEBA is your only other option. CEBA will convert to a 3-year loan at 5% interest. This means your monthly payments will be as follows:

  1. At $60k loan = $1,798.25
  2. At $40k loan = $1,198.84
  3. At $20k loan = $599.42

You should still build a cash flow forecast but now instead take into consideration these payments each month against your cash flow. These payment amounts include principal and interest. 

Option 3: Take a Loan with a third-party lender

This might be a less common option, but it is still an option. There are many lenders in Canada running social media and Google ads saying they will lend you the money to pay off your CEBA loan. What you need to consider is the cost of this third-party loan against the cost of a banks loan. 

If you took $60,000 for your CEBA loan, what these lenders are doing is giving you a $40,000 loan paid over x years with y interest rate. This saves you paying back $20,000 since that is the amount forgiven on a $60,000 CEBA loan. This effectively saves you $22,645.48, where $2,645.48 is interest.

But, you do need to consider the length and rate of their loan against a bank's 3-year / 5% interest loan. 

Conclusion

The January 18, 2024 CEBA deadline is quickly approaching, so you need to decide which option you’ll move forward with. You have three options: make the full payment before the deadline or take out one of the two types of loans. However, you can also apply for an extension on the deadline if necessary. It is important to be aware of the deadline and take the necessary steps to ensure you are compliant.

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