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What’s next for your funded loan?
Understanding the loan grace period
Until December 31, 2023, the interest rate is 0%, principal repayment is not required and your loan may be eligible for forgiveness1.
Taking advantage of loan forgiveness1
$20,000 of a $60,000 loan or $10,000 of a $40,000 loan may be eligible for forgiveness1.
The next few years of your CEBA loan
Before December 31, 2023
Grace period where the interest rate is 0%, no principal repayment is required and you can take advantage of the loan forgiveness feature.
December 31, 2023
End of grace period.
January 1, 2024
Your CEBA loan will be converted to a 2-year 5% term loan if not fully repaid by December 31, 2023.
December 31, 2025
Deadline to fully repay your CEBA loan.
CEBA loan at a glance
Loan amount
$40,000 or $60,000
Loan terms prior to December 31, 2023
Interest rate
0%
Principal payments
Not required
Forgiveness1
For $40,000 loans: $10,000 could be forgiven if $30,000 is fully repaid by December 31, 2023
For $60,000 loans: $20,000 could be forgiven if $40,000 is fully repaid by December 31, 2023
Loan terms after January 1, 2024
Term
Converted into a 2-year term loan if not fully repaid
If you wish to fully repay your loan and do not want to take advantage of the forgiveness benefit, please indicate this to your advisor or in your repayment form.
Repayments after January 1, 2024
Monthly interest-only payments will automatically be deducted. The outstanding balance must be repaid in full by December 31, 2025.
CEBA FAQ
Loan details
The CEBA loan is interest-free. If the loan can’t be repaid by December 31, 2023, it will be converted into a 2-year term loan charging an interest rate of 5%.
You have until December 31, 2023 to repay the loan without interest charges.
If you have a $40,000 loan, a quarter of the CEBA loan, $10,000, is eligible for complete forgiveness1 if $30,000 is fully repaid on or before December 31, 2023.
If you have a $60,000 loan, a third of the CEBA loan, $20,000, is eligible for complete forgiveness1 if $40,000 is fully repaid on or before December 31, 2023. After this date, any outstanding principal is automatically converted into a 2-year term loan charging an interest rate of 5%.
The loan is interest-free until December 31, 2023. No principal repayments are required during this period, unless you want to repay $30,000 or $40,000 to qualify for the $10,000 or $20,000 forgiveness1 feature.
If you choose to extend the loan beyond this date, interest of 5% applies during the extension period. While no principal repayments are required until December 31, 2025, it’s always good practice to make steady installment payments to match the incoming cash flows from your business operations.
Your loan forgiveness amount is based on the loan amount you borrowed and the amount you have repaid by December 31, 2023. You must also be eligible at all times in order to claim the forgiveness. You will only receive the forgiveness amount if you have repaid $30,000 out of your $40,000 loan, or $40,000 out of your $60,000 loan, or $10,000 out of your $20,000 loan expansion.
If you borrowed $40,000 and you have repaid $30,000 on or before December 31, 2023, your loan forgiveness will be $10,000.
If you borrowed $60,000 and you have repaid $40,000 on or before December 31, 2023, your loan forgiveness will be $20,000.
If you repaid $30,000 out of your $40,000 loan, claimed the forgiveness amount, and thereafter received the $20,000 expansion and repaid $10,000 on or before December 31, 2023, your loan forgiveness will be $10,000.
If, on or before December 31, 2023, you have repaid less than $30,000 out of your $40,000 loan, or less than $40,000 out of your $60,000 loan, or less than $10,000 out of your $20,000 loan expansion, you will not be eligible to receive a forgiveness amount.
Note:The forgiveness amount cannot be included as your repayment amount.
Refer to a few examples:
If you borrowed
And you repaid by December 31, 2023
Your forgiveness amount
Example 1
$40,000
$30,000
$10,000
Example 2
$60,000.
$40,000
$20,000
Example 3
$20,000
$10,000
$10,000
Example 4
$40,000
$25,000
$0
If you choose to extend the loan beyond December 31, 2023, a 5% interest rate applies on the outstanding balance during the extension period. While no principal repayments are required until December 31, 2025, it’s always good practice to make steady installment payments to match the incoming cash flows from your business operations.
Only the forgivable portion of the CEBA loan is taxable ($10,000 or $20,000 depending on loan type), while the remaining amount ($30,000 or $40,000) is considered a repayable loan and doesn’t need to be declared. The forgivable portion of the CEBA loan ($10,000 or $20,000) is taxable in the year in which the loan is received. You can declare the forgivable loan portion to the CRA for the year in which the loan is received either by including it in your business reported income or reducing the deduction for business expenses by the amount of the forgivable portion. If you need more information on how to do this or have other questions about how to prepare your future tax returns, speak to the CRA or your accountant.
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