If you are self employed
you might remember taking a loan within Covid that allowed you to keep part of the debt interest free (think gift) if you paid it back within a set time frame. Well. That time my friends is here now. Not exactly great timnig with a pending recession around the corner. That being said what is a business owner to do? Here is an email that I am sending out to my business for self clients. Ones who might have questions. I am here for your solutions and answers.
As you are probably already aware, the CEBA loans have been a valuable resource for eligible business owners and non-profits, providing interest-free loans of up to $60,000. I'd like to emphasize an important reminder concerning these loans and the associated benefits:
Part of the funds provided through CEBA includes a grant from the government, essentially free money, as long as the loan is repaid by the deadline of January 18, 2024
If you happen to know a business owner who may be facing challenges in repaying their CEBA loan by the January 18, 2024 deadline, here are some crucial points to consider:
Loss of Grant Portion: Failure to repay the loan by the deadline will result in the loss of the FREE grant portion, which could amount to a significant sum (potentially between $10,000 and $20,000, depending on the loan).
Conversion to 2-Year Loan: Any outstanding amount not repaid will be converted into a 2-year loan with a 5% interest rate. For instance, for those who borrowed the full $60,000, this conversion would result in 24 monthly payments of approximately $2,632.30.
Impact on Credit: The outstanding unpaid amount will be reported as a personal debt, potentially affecting one's credit score and their ability to qualify for other loans, including mortgages.
To assist business owners who may need financial solutions to meet the repayment deadline, we offer several options: Refinancing their home to access the necessary funds. Exploring short-term private lending loans. Considering a second mortgage or a home equity line of credit.
Exploring business loan options.
If you or anyone you know has outstanding CEBA debts and requires assistance in obtaining the necessary funds for repayment, please don't hesitate to reach out to me at 416-669-6322 or via email at firstname.lastname@example.org. I am more than willing to explore the available options and provide guidance. Beyond that if you have any other accounting friends/ colleagues who might have clients who could benefit from this info I would love an introduction OR if you hit forward on this email I would appreciate any connection.