Garron Helman


Once in a Lifetime Opportunity – CEBA in 2024

Almost 80% of all businesses in Canada have a CEBA loan, representing just under $50B in federal funds.  In less than half a year, most entrepreneurs will attempt to repay or refinance these loans. Whether or not they will be able to do so remains to be seen, but there’s no doubt CEBA loans represent a major financial challenge (and opportunity) for Canadian lenders and fintechs.

Two-thirds of the $50B in CEBA loans are $60,000, while the remaining are $40,000.  The loans include a forgiveness feature, wherein the federal government has agreed to forgive up to $20,000 of the $60,000 loans and $10,000 of the $40,000 loans, provided they are repaid by a certain date. The federal government’s announcement on September 14, 2023, extended this date to January 18, 2024. It also added an extra wrinkle to the forgiveness portion of the loan.  

As of 2023, if a business applies for loan refinancing through the financial institution that holds its CEBA loan before January 18, 2024, the forgiveness deadline and interest-free period are automatically extended to March 28, 2024.  In practice, this means any business looking for an extra two and a half months of interest-free CEBA loan will apply for refinancing – and they’ll do so in the relatively short time frame between Q4 2023 and January 2024. 

Imagine the massive volume of loan applications the banks and credit unions now need to adjudicate.  Many of the applications will be from companies that are far from credit-worthy. Others may have the cash in the bank but just want a few more weeks of an interest-free loan.

The banks and credit unions face a number of challenges.  With the volume of loan applications, they’ll need robust systems to review them well in advance of the March 28, 2024 forgiveness deadline.  This is a monumental challenge in operations alone, given the approximately six hundred thousand CEBA loans outstanding.  There is also a significant risk to the financial institution’s reputation.  

It may have been the federal government offering up the funds, but it was the FI’s who provided a credit facility to their clients, using the FI’s letterhead. CEBA loans were offered to businesses on the basis of financial need – not creditworthiness. As a result, many SMBs will not qualify for bank financing and may be upset with their lender.  In addition, in the event that the company defaults on the loan, the CRA has been named as the collection agency on behalf of the government – not the bank.

Imagine the impact on credit, and on the FI’s balance sheet, when companies drain their operating accounts to repay CEBA funds. As our FIs are well-capitalized, this should not be significant. However, it is something to look out for.  At this stage it is difficult to find an upside for banks and credit unions – they’re paid a stipend by the government to administer the CEBA program but have significant marketing, operational, reputational and credit risks to manage at the same time.

The general consensus is that 70% of CEBA borrowers will have the capital to repay their loans. Ten percent of companies should not have received the loan in the first place or are insolvent. Out of the remaining 20% of companies, most will seek refinancing and 30% to 50% will have sufficient credit to be funded by an alternative lender.  At a conservative 30% of this remaining 20% of $50B, this represents a $3B lending opportunity.  Banks and credit unions may fund $1B, which leaves $2B to alternative lenders. This is a massive amount of lending and more than 4X the total merchant cash advance (MCA) market in Canada. Buckle up, this is going to be a wild ride!

It will be critical that lenders be prepared, as they could ingest 4 times the typical loan volume in a single quarter.  The volume will start in early January and on March 29, 2024, everyone should take some well-deserved time off! The amount of activity in these three months should be an order of magnitude greater than anyone has ever seen. Still, we must do our part to support the Canadian entrepreneurs and SMB’s. MCA’s, alternative lenders, banks and credit unions are not altering their underwriting or credit criteria for this opportunity.  If anything, due to the volume, it may be more difficult for sub-prime businesses to obtain credit. In order to capitalize on CEBA – and support the small business recipients – lenders need the systems, people, brand and planning to effectively service the market at this time.

There is little doubt that the CEBA forgiveness deadline is going to be monumental for borrowers and lenders.  Exactly how, and who, will emerge victorious is something we’ll find out in time, but we won’t have to wait long. The CEBA loan forgiveness deadline occurs in just a few short months, so be prepared for what could be a denying moment for the Canadian lending landscape.

About the author:

Garron Helman is the founder of CEBA.CA, a resource focused on assisting businesses with information, tools and news to refinance their CEBA loans.  Garron has successfully founded and exited multiple businesses that focus on growing SMBs in Canada with non-dilutive capital.


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