Canada Emergency Business Account (CEBA) loan

A seller’s company may still carry a CEBA loan when it is sold. The Department of Finance says loans outstanding after the forgiveness deadline converted to term loans with interest, and the CEBA program’s FAQ says the deadline to apply for refinancing to qualify for the extended forgiveness deadline has passed. The program notes that certain loan holders who did not qualify for the loan they received were not eligible for forgiveness and had to repay it in full. See tax on forgiven debt.

If it is not repaid

The CEBA program says that if a borrower cannot repay when due, the financial institution will contact the borrower to request a lump sum. If the borrower does not repay in full, the institution will likely be required to assign the loan to the CEBA Program for collection. The Canada Revenue Agency may then review the circumstances case by case.

• Ask whether the loan is still outstanding and get written confirmation from the lender.
• Ask which entity borrowed and whether the sale leaves the loan with it.
• Confirm the current repayment date on the CEBA program site.
• Ask how the sale agreement will treat the balance; see debt forgiveness rules.