Big Six banks open to refininance emergency business loans

Big Six banks open to refininance emergency business loans

The Big Six banks are open to refinancing Canada's emergency business loans for small businesses, though they provide few details and say new terms will be determined on a case-by-case basis.

CEBA was the most frequently used COVID-19 support program for businesses, with the federal government giving loans of $40,000 or $60,000 to nearly 900,000 corporations in 2020 and 2021. The government created the program, but it was overseen in cooperation with financial institutions. The loans are backed by the government.

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

After that, none of the loan will be forgiven and interest will start to accrue at 5 per cent per year. The loans will be due in full by Dec. 31, 2026.

Ottawa also named a new deadline on Thursday for companies in talks to refinance their CEBA loan, if the loan is partially forgiven if an agreement with the government is reached by March 28th, 2024.

Businesses that cannot repay their loans in full by Jan. 18, but still want the loan to be partially forgiven are welcome to refinance. The trade-off is that retaining the government terms results in a larger loan at 5 percent interest, or a smaller loan at an interest rate that will be higher than the current prime rate of 7.2 percent.

Bank of Montreal said it has a program for helping CEBA recipients streamline their loans and take advantage of the government's partial loan forgiveness.

BMO's Jeff Roman, a BMO spokesman, said the agency had not released the details of the investigation.

National Bank said it has been proactively reaching out to some customers with financing options.

Yuri Park, a RBC spokeswoman, said that the bank's standard credit approval process and provided under the bank's normal lending terms and conditions.

Canada Imperial Bank of Commerce said it will allow customers with CEBA loans to refinance them, but they will have to contact the bank for details.

The banks said they will evaluate the requests on a case-by-case basis.

Some alternative lenders have already started advertising their CEBA refinancing programs. The loans can be offered to business owners who can't get re-approved at a bank, but will likely have higher interest rates.

Mathieu Labrèche, a spokeswoman for the Canadian Bankers Association, said banks supported the government's decision to extend the deadlines.