Area of Law: Coronavirus COVID-19
Answer # 7251
Canada Emergency Business Account (CEBA)Region: Ontario Answer # 7251
To ensure that small businesses have access to the capital they need to see them through the current economic challenges due to COVID-19, the Federal Government has implemented the Canada Emergency Business Account (CEBA). CEBA supports businesses by providing financing for expenses that cannot be avoided or deferred.
How much is the loan?
This program provides interest-free loans of up-to $40,000.
The program offers interest-free loans to:
- small businesses including those that do not have a payroll,
- sole proprietors receiving income directly,
- family-owned corporations receiving dividends rather than payroll, and
- not-for-profit organizations.
To qualify, a borrower must:
- be a Canadian operating business in operation as of March 1, 2020.
- have a federal tax registration.
- have employment income paid in the 2019 calendar year, between $20,000 to $1,500,000 (in Canadian dollars). For borrowers with $20,000 or less in total employment income paid in 2019, different requirements apply:
- the Borrower has a Canada Revenue Agency business number and has filed a 2018 or 2019 tax return
- the Borrower has eligible non-deferrable expenses between Cdn.$40,000 and Cdn.$1,500,000. Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance. Expenses will be subject to verification and audit by the Government of Canada
- have an active business chequing/operating account with the Lender, which is its primary financial institution. This account must have been opened on or prior to March 1, 2020 and was not in arrears on existing borrowing facilities, if applicable, with the Lender by 90 days or more as at March 1, 2020.
- have not previously used the CEBA, and will not apply for support under the Program at any other financial institution.
- acknowledge its intention to continue to operate its business or to resume operations, and
- agree to participate in post-funding surveys conducted by the Government of Canada or any of its agents.
If loan is repaid by December 31, 2022
If a business repays the balance of the loan – on or before December 31, 2022 – 25% of the loan amount (up-to $10,000) will be forgiven, which means it will not have to be repaid.
Updates to requirements and deadlines as of October 2020
- As of October 26, 2020, eligible Canadian businesses currently operating through a personal bank account can apply for CEBA.
- CEBA support is being expanded from $40K to $60K. This expansion will be available to all eligible previous and new CEBA applicants. Details will be announced in the coming weeks.
What is the deadline to apply for CEBA?
All applicants have until December 31, 2020, to apply.
How to apply
Small businesses and not-for-profits should contact their financial institution to apply for these loans.
For more detailed and up-to-date information on CEBA, visit Canada.ca. For information on other available supports for businesses and individuals, visit the Government of Canada Economic Response Plan website.
Provincial relief programs for businesses: There may also be financial relief programs and incentives for businesses available from provincial governments. For more info, visit our related links and resources for what is available where you live.
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