CEBA Deadline Extended – Is it Enough?

 In Canada Revenue Agency

It’s almost a year since I last wrote about Covid assistance for businesses.  It’s hard to believe we’re still on the same treadmill, but here we are with the Omicron wave pushing healthcare systems to the limit and a variety of lockdown and capacity limits in place across the country.

The federal government announced this week that the deadline to repay CEBA loans in full to get the forgiveness benefit has been extended by a full year to December 31, 2023.  This applies to loans extended through the Regional Relief and Recovery Fund as well.  If you pay your outstanding loan in full by December 31, 2023, you will qualify for the forgiveness of $10,000 on the $40,000 loan or $20,000 if you had the full $60,000 loan.  While this is welcome news, is it enough?

Small Businesses continue to struggle

The deadline extension does nothing for small businesses that don’t have enough income to pay current expenses, never mind save up to repay their CEBA loan.  For many businesses, the extension isn’t the help they need now.

Business owners are facing difficult decisions in the coming months as they continue to accumulate debt and try to stay afloat.  Restaurants, banquet facilities and caterers missed much of the Christmas and New Year’s season they rely on to get through the lean months in January and February.  Gyms are closed or facing restrictions in their prime selling season as many people would normally be signing up resolving to get fit as the new year starts.  Personal service businesses like hair and nail salons and spas lost revenue as Omicron took off just prior to the busy holiday season.

You are not required to continue to operate your business just because you took government assistance.  You need to carefully consider whether your business is viable, and whether it can ever generate enough income to repay the debts that have accumulated over the past two years.  You might be better off closing your business and starting over, or doing something completely different.

Get professional advice from an LIT

Don’t use your savings, cash in your RRSP’s, sell or refinance your home or take any other major steps to invest in your business or pay off its debts without getting professional advice.  If you are going to invest in the business, you may be able to register security against the assets to protect yourself down the road.  If you are thinking about closing your business, you need to figure out what you may be personally liable for and get some advice from a Licensed Insolvency Trustee before you use personal assets to pay business debts.

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