CEBA repayment deadline extended; Ontario adds new COVID-19 relief benefits
The federal government announced this week that the repayment deadline for interest-free loans qualifying for partial loan forgiveness under the Canada Emergency Business Account (CEBA) program—a relief benefit designed to aid struggling organizations during the coronavirus pandemic—has been extended.
Eligible small businesses and not-for-profits that took CEBA loans of as much as $60,000 will now have until December 31st, 2023, to repay funds and qualify for loan forgiveness of as much as 33 per cent of the loan (or up to $20,000). The loans were intended to help organizations pay for fixed costs such as wages, utilities and rent. The CEBA program—which was available through financial institutions and is now closed—was expanded several times as continuous COVID-19 lockdowns and social distancing restrictions impacted organizations’ revenue, particularly in sectors such as live events, hospitality and tourism. That included increasing the loans on offer to as much as $60,000 from the previous $40,000 in available financing.
CEBA loans are interest-free until the new December 31st, 2023 repayment deadline and no principal repayments are required until that point. As of January 1st, 2024, loan recipients will be charged 5 per cent per annum on outstanding loan balances, but only interest payments are required until full principal repayment is due on December 31st, 2025. As the government explains, “If the outstanding principal, other than the amount of potential debt forgiveness, is repaid by December 31st, 2023, the remaining principal amount will be forgiven, provided that no default under the loan has occurred.”
To date, Ottawa reports that more than 898,254 businesses in Canada have been approved for CEBA loans, with more than $49.17 billion in funding distributed through the program.
Ontario introduces new COVID-19 relief measures
The most recent COVID-19 restrictions introduced in Ontario—intended to combat the spread of the Omicron variant—have created major operating and financial challenges for organizations across sectors. In response, Queen’s Park has introduced a $10,000 grant available to eligible businesses forced to close or limit capacity under new rules outlined in the province’s Step Two of the Roadmap to Reopen. Eligible small businesses include:
- Restaurants and bars
- Facilities for indoor sports and recreational fitness activities (including fitness centres and gyms)
- Performing arts and cinemas
- Museums, galleries, aquariums, zoos, science centres, landmarks, historic sites, botanical gardens and similar attractions
- Meeting or event spaces
- Tour and guide services
- Conference centres and convention centres
- Driving instruction for individuals
- Before- and after- school programs
Businesses that qualified for the previous Ontario Small Business Support Grant (since closed) and are now subject to closure will be pre-screened for eligibility and will not need to apply to receive the new $10,000 grant. Businesses that are newly established or newly eligible will need to apply for the program when the government begins accepting applications; that date has not yet been announced. Qualifying organizations should expect payment in February.
In additional relief measures, Ontario is setting electricity rates for small businesses at off-peak rates, or 8.2 cents per kilowatt-hour, for 21 days starting from January 18th, 2022. The rate will apply automatically and SMEs will not be required to apply for the discount. The government also recently announced that the application for the Ontario Business Costs Rebate Program will open on January 18th, 2022. Eligible businesses (e.g., those that have been required to close or reduce capacity) will receive “… rebate payments for up to 100 per cent of the property tax and energy costs they incur while subject to public health measures in response to the Omicron variant.” Businesses that have been required to operate at reduced capacity will receive a proportional rebate equivalent to 50 per cent of their costs.
If you have questions about CEBA or other federal or provincial government pandemic relief programs, please contact a member of our team.
Armando Iannuzzi, Co-Managing Partner