This program will provide $25 billion in total funding consisting of interest-free, partially forgivable loans of up to $40,000 to small businesses and not-for-profits in all sectors and regions. To qualify, organizations will need to demonstrate they paid between $50,000 and $1 million in total payroll in 2019. CEBA is 100 per cent guaranteed and funded by the Government of Canada and is now available at various financial institutions and credit unions.
WHAT YOU NEED TO KNOW:
The Canada Emergency Business Account is part of the federal government’s loan and loan-guarantee program for small and medium-sized businesses affected by the COVID-19 pandemic.
The $25-billion program opened to applicants on April 9, and provides a $40,000 loan that is interest-free until Dec. 31, 2022.
The loans are intended to help businesses meet their financial obligations amid shutdowns of non-essential businesses to slow the spread of the virus.
CEBA loans are backed by the government, and up to 25 per cent of each loan, or $10,000, is eligible for forgiveness if the rest is paid on time (by Dec. 31, 2022). For those unable to repay at that time, the loan can be converted into a three-year term loan at an interest rate of 5%.
WHO IS ELIGIBLE?
Canadian-operated businesses that have federal tax registration and a payroll in the 2019 calendar year of between $50,000 and $1-million, verifiable by Canada Revenue Agency documentation (a T4 summary of remuneration paid, or T4SUM), are eligible.
WHO IS INELIGIBLE?
Businesses that were behind on their payments for an existing loan on March 1 of this year are not eligible for CEBA loans.
Sole proprietors who use a personal chequing account while operating in the name of a business are not eligible.
Businesses owned by a government body or an elected official cannot receive a CEBA loan.
Most union, charitable, or religious organizations are not eligible under the CEBA program.
HOW DO I APPLY?
Qualifying businesses apply online through the bank or financial institution that holds their primary business operating account.
Applicants need their T4SUM document from the Canada Revenue Agency, as well as their 15-digit CRA business number or employer’s account number. Bank account information is also required.
Banks such as TD Bank, Bank of Montreal, CIBC and RBC require those applying to have online business banking set up.
WHAT EXPENSES ARE COVERED/NOT COVERED?
CEBA provides much needed credit for small businesses to pay for immediate operating costs such as payroll, rent, utilities, insurance, property tax, or debt service.
The funds may not be used to cover any payments or expenses such as prepayment/refinancing of existing indebtedness, payments of dividends, distributions and increases in management compensation.
To learn more about this program visit The Government of Canada’s CEBA FAQ.
Questions if this applies to you? Contact us today.