In this guide, we delve into the most effective methods to repay your CEBA loan, potentially saving you up to $20,000.
Jessi Johnson, with nearly two decades of expertise in mortgage brokerage and real estate, offers insights into this complex topic.
Key Updates and Loan Repayment Strategies
Repayment Deadline: The deadline for CEBA loan repayment to be eligible for forgiveness is now extended to January 18, 2024.
Partial Loan Forgiveness: If you need extra time post-January 18, 2024, to finalize your CEBA loan payout, partial forgiveness is still an option, provided the principal and interest are cleared by March 28, 2024.
Understanding CEBA Loans
The Canada Emergency Business Account (CEBA) has been crucial for businesses during the pandemic, with significant sums yet to be repaid.
About 89% of small Canadian businesses utilized these loans.
Repayment Options and Strategies
Selling Stocks or Investments: Consider this if your investments are underperforming. Understand the tax implications versus the benefits.
Refinancing Existing Mortgage: This can be a cost-effective option. Check with lenders about rates and associated costs.
Secured Line of Credit: Ideal if you have an existing collateral mortgage. Check for applicable rates and terms
Unsecured Line of Credit, BDC, or Bank Business Loan: Explore options with the Business Development Bank of Canada or your bank.
Secured Private Mortgage Equity Loan: Suitable for those with lower credit ratings or limited declared income.
Unsecured 3rd Party Loan: Generally the most expensive option, recommended only if you can repay quickly.
Avoiding Bankruptcy
As a last resort, consider bankruptcy, but it’s usually better to explore all other options first.
Implications of Not Exercising Strategies
If you choose not to utilize these strategies, prepare for a 5% annual interest on the outstanding CEBA loan balance after January 19, 2024.
Consider the impact of high monthly repayments in the current economic climate.
Stay Informed
Remember, the forgiven portion of the loan might be taxable, affecting your overall savings calculation.
Keeping up-to-date with real estate and business finance changes is crucial.
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