Paying off your CEBA loan before December 31, 2026

If your business still has a Canada Emergency Business Account (CEBA) loan outstanding, the whole balance is due on December 31, 2026. That is close enough now that the plan needs to be made this quarter, not next.

Here is where CEBA loans stand, and the ways to pay one off.

Where CEBA loans stand now

CEBA was the interest-free pandemic loan of up to $60,000, delivered through banks and credit unions. Part of it was forgivable — up to $20,000 — if the rest was repaid by the deadline in early 2024.

Loans that were not repaid by then changed shape:

• They became three-year term loans, starting January 19, 2024.
• They carry 5% annual interest on the full outstanding balance — including the part that would have been forgiven.
• Interest is paid monthly; the principal is not.
• The full balance, and any interest owing, is due by December 31, 2026.
• You can repay some or all of it early, with no penalty.

The forgiveness window has closed. Whatever is outstanding now is owed in full.

Step one: find out exactly what you owe

Log in to the account at the bank or credit union that issued your CEBA loan, or ask them for a payoff statement. You want two numbers: the principal outstanding, and the interest that will have accrued by the date you plan to pay.

The options for paying it off

Pay it from cash. If the business has the money without leaving itself short, this is the simplest answer. Check a normal month's cash position after the payment, not a good month's.

Pay it in instalments now. Nothing stops you paying it down gradually before the deadline. Every dollar repaid early stops costing 5%. If a lump sum in December would hurt, spreading it over the months left is a plan in itself.

Use a line of credit. If you have a line of credit with room on it, drawing on it to clear CEBA swaps one balance for another. It only makes sense if you can pay the line down over the following months — a line drawn to the ceiling and held there is a problem of its own.

Refinance it with a term loan. A term loan pays off CEBA in one go and replaces it with a fixed payment over a longer schedule. This is the common answer for businesses where $40,000 or $60,000 out of the account at once is not realistic.

The one thing to know about refinancing

At 5%, CEBA is cheap money. Almost anything you replace it with will cost more — a bank loan somewhat more, alternative financing considerably more. So:

• Do not refinance earlier than you need to. There is no reason to swap 5% for a higher rate in October if you can carry CEBA until December.
• But arrange it early. Every business with a CEBA balance is up against the same date, and December is not the month to be waiting on paperwork. Have the replacement lined up well before you need to draw it.
• Borrow only the gap. If you can pay part from cash, refinance only the rest.
• Compare on the total in dollars. What working capital costs shows how, and the business loan calculator will do the arithmetic.

What if you cannot pay by the deadline?

Talk to the lender that holds your CEBA loan before December 31, not after. A CEBA loan is a debt like any other once it is past due, and a lender can pursue it. A conversation in October has more options in it than one in February.

Where we fit

If the answer is a term loan or a line of credit, that is what we place: one application, taken to the lenders we work with, and the total you repay shown before you decide. The lender makes the decision. If the business can pay CEBA from cash comfortably, do that instead — it is cheaper than anything we could arrange.

For the rest of the route, see how to get a business loan in Canada.