The Regional Relief and Recovery Fund (RRRF) was a COVID-19 response by the Federal Government which has stopped accepting applications. Businesses were provided with up to $60,000 worth of interest-free loans under the program, that weren’t able to access other federal and provincial funding programs. The program offers partial forgiveness if payments are made before the 18th January 2024 deadline. We’re going to break down how this partial forgiveness works and explain how you can qualify.
What is Partial Forgiveness?
Partial forgiveness means that a portion of the outstanding loan balance will be forgiven if a minimum repayment is made by the extended deadline of 18 January 2024. The criteria used to determine how much of the loan can be forgiven depends on two factors:
- The amount of the total loan
- The percentage of the repayment made by the deadline
The amount of the total loan is used to calculate the forgivable portion of the RRRF loan by considering whether the total amount was $40,000 or less, or whether the amount was more than $40,000, but up to $60,000.
Loans that were $40,000 or less require a repayment of at least 75% to be forgiven for the remaining 25%. For any amount above $40,000, 50% is forgiven on the amount above $40,000 in addition to the 25% of the first $40,000. To simplify, debt forgiveness is only granted if the entire outstanding balance is cleared by the deadline. To explain with more clarity, we’ve given examples below:
| Example 1 | Example 2 | Example 3 | Example 4 | |
| Total outstanding amount | $40,000 | $40,000 | $50,000 | $60,000 |
| Amount repaid by deadline | $30,000 | $25,000 | $35,000 | $40,000 |
| Forgiveness amount | $10,000 (25%*40,000) | $0 (since less than 75% was repaid) | $15,000 (25%*40,000 + 50%*10,000) | $20,000 (25%*40,000 + 50%*20,000) |
A more in-depth explanation is provided on the Government of Canada’s FAQ page.
Who Qualifies for RRRF Partial Forgiveness?
To qualify for RRRF partial forgiveness, your company has to be in good standing. What this means is that your company had to qualify for the following two criteria:
- Your company did not receive CEBA funding, and
- received an amount of $60,000 or less.
If you are uncertain whether your company qualifies for partial forgiveness, you can refer to the RRRF contribution agreement, or send an email to rrrfmonitoring-farrsuivideprojet@feddevontario.gc.ca.
What Will Happen to the RRRF Loan if It Is Not Fully Paid by the Deadline?
If the loan is not fully paid by the deadline, the remaining balance is converted into a two-year loan at 5% annual interest. This loan must be fully repaid by 31 December 2025.
Luckily, if you are unable to make the payment by the deadline, Merchant Growth is offering loan refinancing so that you can qualify for the forgiveness. This option will make sense for most companies that are unable to repay the outstanding amount by the deadline. There may be a few cases where the amount of forgiveness is not comparable to the additional interest payable, so it’s important to do some calculations before deciding whether this is the right step for you.
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