Getting Your Free $10,000 with CEBA
Canada Emergency Business Account (CEBA) will give you $10,000 for free if you manage your money correctly until the end of 2020. CEBA in a nutshell is a $40,000 loan for small businesses to help with economic relief during COVID-19. If you are approved, you get a $40,000 interest free loan until December 31st, 2022 and whatever you don’t pay by then will be repayable at a 5% fixed interest until December 31st, 2025.
So where does your free $10,000 come from?
If you repay 75% or $30,000 of your CEBA before December 2022, the government will forgive 25% of your loan, or $10,000. You save $10,000 instantly.
For you to be able to gain this $10,000 from CEBA you will need to figure out a strategic re-payment plan that keeps you on budget and ensures you will have repaid $30,000 on time. So, what if you wanted to start repayments in August 2020?
First you need to consult with you bank as each bank has different rules for handling and repaying the CEBA loans. For example, if you bank with TD, Scotiabank, or RBC you can start making repayments any time you want. If you bank with CIBC, you can’t officially make repayments until October 1st, 2020.
Once you understand when you can start making payments, both of your own financial situation and physically with your bank, you need to think about how much, and when you need to pay. Let’s look at some sample plans:
| Repayment Start Date: | Number of Months: | Cost Per Month: |
| August 2020 | 29 | $1,035 |
| October 2020 | 27 | $1,112 |
| January 2021 | 24 | $1,250 |
If you plan financially to pay on or before the required repayment period starts in January 2021 you will be paying $1250 or less per month. But what if your business doesn’t pick up until later and you can’t afford full monthly payments from the beginning?
Let’s assume you pay $500 a month starting January 2021 for the first 6, 12, and 18 months. Then when your business picks up, you plan to repay your $30,000 on time. Here are some alternative examples:
| Low Payment Months: | Total Repaid During Low Times: | Plan Start Date After Business Increases: | Monthly Repayment Amount: |
| 6 | $3,000 | July 2021 | $1,500 |
| 12 | $6,000 | January 2022 | $2,000 |
| 18 | $9,000 | July 2022 | $3,500 |
There are many options for repaying your loan on time; however, the longer you leave your payments, the more drastic your repayment plan becomes for being able to keep your $10,000.
Every business is unique and is affected by various factors which influence how you can effectively create a payment plan that works for you. To help create a personal plan for your business, or for managing your businesses expenses, contact Hummingbird Financial today for all your small business needs!
