Navigating CEBA Loan Repayment and Refinancing: A Comprehensive Guide

How Banks and Credit Unions Are Assisting Canadian Businesses

The year 2023 brought significant changes to the CEBA (Canada Emergency Business Account) program in Canada. Announced in mid-September, these changes introduced increased flexibility regarding loan repayment timelines. While the extension might seem modest, it offers businesses more time to explore CEBA refinancing options, allowing them to make well-informed decisions tailored to their unique situations.

In this comprehensive guide, we will delve into the timeline for CEBA loan refinancing, how financial institutions determine eligibility for refinancing, and the strategies adopted by banks and credit unions to assist businesses in managing their CEBA loans. We will also provide insights into select financial institutions’ approaches to CEBA loan repayment and refinancing.

Timeline for CEBA Loan Refinancing

The recent announcement from the Canadian government concerning CEBA loan repayment deadlines clarified a critical aspect of the program. While some borrowers might have hoped for a more extended extension, the announcement shifted the CEBA loan repayment date (the date crucial for loan forgiveness eligibility) from December 31, 2023, to January 18, 2024. Though this extension may appear brief, it offers businesses seeking refinancing a bit more breathing space.

Furthermore, if a borrower applies for a loan through the financial institution holding their CEBA Loan, the repayment deadline to qualify for loan forgiveness automatically extends to March 28, 2024 – even if the application is denied. This extension provides a valuable opportunity for businesses to explore CEBA refinancing alternatives.

Businesses have the option to apply for a refinanced CEBA loan anytime before January 18, 2024. Regardless of whether the business loan is approved or denied before March 28, 2024, the repayment deadline to qualify for CEBA loan forgiveness is extended until March 28, 2024.

How Financial Institutions Determine Eligibility for CEBA Loan Refinancing

Eligibility for CEBA loan refinancing hinges on a business’s financial situation. The CEBA program was initiated by the federal government in response to the COVID-19 pandemic, and loans were disbursed through financial institutions as part of a relief measure. Unlike traditional lending practices, CEBA loans did not entail rigorous creditworthiness assessments, revenue history evaluations, or credit score checks before approval. The government streamlined the process to ensure swift fund disbursal through existing financial institutions.

Consequently, even businesses with poor credit or those who would typically not qualify for a credit facility gained access to CEBA loans. The federal government shouldered the risk of repayment for CEBA loans, leveraging banks and credit unions as conduits for program execution. Therefore, when an SMB seeks a CEBA refinancing loan to qualify for loan forgiveness, the financial institution assumes the risk instead of the government. As a result, financial institutions are subject to potentially stricter underwriting guidelines.

Credit Unions Refinancing CEBA Loans

Credit unions have been actively participating in CEBA refinancing, providing options to help their clients leverage government-sponsored loan forgiveness.

Meridian Credit Union: Meridian Credit Union offers one of the most competitive CEBA refinancing programs, with potential loans of up to $40,000 at a rate of prime plus 1.25% and a repayment period of 36 months. As of the current prime rate, this translates to an interest rate of 8.45%. Meridian’s refinancing program requires applicants to complete a personal net worth statement to determine their eligibility. It’s important to note that personal credit plays a significant role in underwriting and approving business loans at Meridian.

Vancity: Vancity has developed an informative infographic to assist their customers in planning recurring payments to repay their CEBA loans. For clients who haven’t repaid enough to qualify for CEBA forgiveness, Vancity offers loan options to bridge the gap. Clients can reach out to Vancity advisors, branch staff, or call 604-877-7000 to connect with the Vancity Member Service Centre.

Coast Capital: Coast Capital has set up a dedicated webpage to assist clients in navigating CEBA loan repayment. Their form enables Coast Capital customers to choose from a variety of repayment options. For businesses interested in CEBA refinancing, reaching out to a Coast Capital business banking team member online or by phone is recommended.

Other Credit Unions: If you bank with a different credit union, it is highly likely that they offer CEBA refinancing options. It is essential to contact your credit union to establish a repayment plan for your CEBA loan. You can find a list of all credit unions on this page.

Major Banks Refinancing CEBA Loans

Canada’s major banks have actively participated in the CEBA program and are willing to offer CEBA loan refinancing options.

Royal Bank of Canada (RBC): RBC has been proactive in reaching out to its customers, encouraging them to consult their account managers regarding CEBA loan repayment. RBC offers a portal for customers to request CEBA refinancing loans, simplifying the process. If businesses encounter difficulties in repaying their CEBA loans or believe additional cash flow could be beneficial, they can apply for a CEBA extension loan through the RBC portal.

Toronto-Dominion Bank (TD): TD extends CEBA refinancing to its customers through its app or website. Customers are also welcome to visit their branch or call their account manager for assistance. The terms of TD’s CEBA refinancing align with those of other banks, featuring a loan payable by December 31, 2026, and an interest rate in the low double-digit range.

Canadian Imperial Bank of Commerce (CIBC): CIBC simplifies CEBA loan repayment with a dedicated link on their website. They also provide comprehensive step-by-step instructions. CIBC offers to refinance CEBA loans for their customers and encourages businesses to consult with their advisors for a full understanding of their options.

Scotiabank: Scotiabank has streamlined CEBA loan repayment by enabling businesses to make bill payments to ScotiaLine for Business VISA. However, for those unable to repay the full loan amount before January 18, 2024, Scotiabank advisors will work with businesses to determine eligibility for CEBA refinancing. Scotiabank’s rates and terms are in line with other major banks.

Bank of Montreal (BMO): BMO actively collaborates with customers to refinance their CEBA loans. BMO offers a Credit Line of Business with rates ranging from prime plus 2% to prime plus 11%, translating to interest rates between 9.2% and 18.2% for qualifying businesses. The range of interest rates indicates BMO’s commitment to assisting a wide range of customers, regardless of their credit scores. Considering the $20,000 loan forgiveness portion, even a higher interest rate can offer long-term benefits, depending on individual circumstances.

National Bank of Canada (National): National Bank provides multiple options for CEBA loan repayment and assists customers in refinancing their CEBA loans if requested. Instructions for loan repayment can be found on their website. Businesses can engage with a bank advisor to determine their eligibility for CEBA refinancing. National also maintains a dedicated CEBA support team reachable at support_CEBA@nbc.