The CEBA Loan Deadline Is December 31, 2026: What’s Actually Left To Resolve

The Canada Emergency Business Account provided interest-free, partially forgivable loans of up to $60,000 to nearly 900,000 Canadian small businesses and not-for-profits during the pandemic[1]. For the roughly one in five loans that missed the forgiveness deadline, this year is when the program's final chapter actually closes.

How We Got Here

CEBA loans issued between April 2020 and June 2021 originally qualified for partial forgiveness, up to $10,000 on a $40,000 loan or up to $20,000 on a $60,000 loan, if the remaining balance was repaid by a set deadline[2]. That deadline, extended more than once through the pandemic recovery period, ultimately landed at January 18, 2024, with a refinancing extension to March 28, 2024 for businesses that applied for alternate financing by the earlier date[3]. Loans not repaid by that point lost eligibility for forgiveness entirely and converted automatically into interest-bearing term loans.

The Current Terms, If You Still Owe

For any CEBA loan that converted to a term loan, interest has been accruing at 5% per annum since January 19, 2024, generally payable monthly[4]. Principal repayment was not required during the term, but the full outstanding balance, principal plus any accrued interest, is due in full by December 31, 2026[4]. There is no early repayment penalty, a business able to pay down principal ahead of the deadline reduces the total interest cost by doing so.

The Tax Treatment, Already Settled

Only the forgivable portion of an original CEBA loan, $10,000 or $20,000 depending on loan size, was ever taxable, and it was taxable in the year the loan was originally received, not in the year of eventual repayment[5]. For loans that lost forgiveness eligibility entirely, this specific tax question does not apply, the remaining balance is simply a loan being repaid, with the interest generally deductible as a business expense.

What Happens If You Genuinely Can’t Pay In Full

A Statistics Canada survey of businesses with outstanding CEBA balances found that while a majority anticipated having the liquidity or credit access to repay by the deadline, a meaningful share reported genuine uncertainty or an expectation they would not be able to[6]. The federal program has described its approach to non-repayment as case-by-case, aimed at establishing a payment plan tailored to actual ability to repay, though a lender may ultimately pursue collection or assign an unresolved balance to the government program directly[7]. Waiting until the deadline itself to have this conversation with a lender leaves considerably less room to negotiate than starting months in advance.

What To Actually Do Between Now And December

With roughly five months remaining as of this writing, the practical options are the same ones available all along, refinancing the balance through a conventional business loan, negotiating a structured repayment plan directly with the lender, or paying down principal steadily to minimize the final balance due. What has changed is the runway, a business that has not yet engaged with its lender about this deadline benefits considerably from doing so now rather than in November.