The Big Six banks say they are open to refinancing Canada Emergency Business Account loans for small businesses, though they provided few details and say new terms will have to be decided on a case-by-case basis.

CEBA was the most widely used COVID-19 support program for businesses, with the federal government handing out loans of $40,000 or $60,000 to nearly 900,000 corporations in 2020 and 2021. The program was created by the government, but administered in co-ordination with financial institutions. The loans are government-backed.

Ottawa changed the repayment deadlines on Thursday after months of pressure from business groups, which argued that most small enterprises still have not financially recovered from the pandemic.

Businesses that repay their loan by Jan. 18, 2024, will have either $10,000 or $20,000 forgiven. After that, none of the loan will be forgiven and interest will begin to accrue at 5 per cent per year. The loans are due in full by Dec. 31, 2026.

Ottawa also created a new deadline on Thursday: If a business has been in talks with its financial institution to refinance its CEBA loan, it can still have the loan partially forgiven if an agreement is reached by March 28, 2024.

Refinancing is an option for businesses that can’t repay their loans in full by Jan. 18, but still want the loan to be partially forgiven. The trade-off is this: Keeping the government terms means a larger loan ($40,000 or $60,000) at 5 per cent interest, or a smaller loan ($30,000 or $40,000) at an interest rate that will be higher than the current prime rate of 7.2 per cent.

Source: The Globe and Mail