Canada Emergency Business Account (CEBA)

The Canada Emergency Business Account (CEBA) provides interest-free loans of up to $40,000 ($10,000 of which is forgivable) for small businesses and not-for-profit organizations. An additional $20,000 (half of which is forgivable) has also been made available for applicants specifically impacted by COVID-19.

How does the expanded CEBA work?

The expanded CEBA provides applicants who are eligible for the original $40,000 CEBA to benefit from an additional interest-free loan of $20,000. Half of the loan (i.e., $10,000) would be forgivable, provided it is repaid by December 31, 2022.

How to Qualify?

To qualify, a business will have to attest that they have been negatively impacted by COVID-19, which was not a requirement for the original CEBA.

Can organization now apply for the additional $20,000?

Answer: yes, organization can apply CEBA loan through their financial institutions.

What’s the Deadline to apply?

The deadline to apply has been extended to March 31, 2021.

The government has also stated that the funds can only be used to pay non-deferrable operating expenses, which include payroll, rent, utilities, insurance, property tax and regularly scheduled debt service. The funds cannot be used for prepayment/refinancing of existing indebtedness, payments of dividends, distributions and increases in management compensation.

Who is Eligible for the CEBA?

The CEBA will be available to:

  1. Small businesses
    1. Not-for-profit organizations
    2. Sole proprietors
    3. Businesses that rely on contractors
    4. Family-owned corporations that pay employees through dividends instead of payroll.

Organizations can qualify for the CEBA through either the payroll stream or the non-deferrable expenses stream.

What are eligibility criteria to apply for CEBA loan?

Regardless of the stream, organizations will have to meet the following criteria:

  • Must be a Canadian operating business in operation as of March 1, 2020.
  • Must have a federal tax registration number, which is the 15-digit number found at the top-right of the T4-SUM.
  • Must have either opened a business banking account with a participating financial institution (FI) on or prior to March 1, 2020, or been operating its business since March 1, 2020 using a personal bank account and successfully opens a business bank account with a participating Canadian financial institution.
  • Must not have previously used the CEBA program (for the original CEBA loan) and will not apply for CEBA support at another FI.
  • Must acknowledge intention to continue to operate its business or resume operations.
  • Must agree to participate in post-funding surveys conducted by Government of Canada or its agents.

Who is not eligible?

The government has outlined specific types of organizations that would not be eligible for the CEBA:

  1. A government organization or body, or an entity wholly owned by a government organization or body.
  2. A non-profit organization, registered charity, union or fraternal benefit society or order, or an entity owned by such an organization, unless the entity is actively carrying on a business in Canada (including a related business in the case of a registered charity) that earns revenue from the regular supply of property/goods or services.
  3. An entity owned by an individual that is a Federal Member of Parliament or Senator.
  4. An entity that promotes violence, incites hatred or discrimination on the basis of sex, gender identity or expression, sexual orientation, colour, race, ethnic or national origin, religion, culture, region, education, age or mental or physical disability.

How to apply for the CEBA

Through that organization’s financial institution, which would be providing this loan in cooperation with Export Development Canada.

For organizations applying through the payroll stream, the application will be made through their financial institution’s website. After the application is submitted, it will be assessed by the government and, if approved, funds will be provided to the business account via the financial institution.

Organizations applying through the non-deferrable expenses stream will also be required to start the application via their bank’s website. On another website businesses are required to provide documentation to support their 2020 eligible non-deferrable expenses and complete the application. If the application is approved, funds will be provided to the business account via the financial institution.

Some banks and credit unions may have a different application process, particularly those in smaller or rural communities. As such, it may be necessary to contact the financial institution to get more details of the application process.

HOW GHi can help

For free consultation on CEBA  loan email us or call at 431 887 4148.

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