Canada Emergency Business Accounts (CEBA)
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This page was last updated on April 16, 2020.
The new Canada Emergency Business Account will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced due to the economic impacts of COVID-19. Borrowers will receive a credit in the amount of $10,000 if they repay the loan in full on or before December 31, 2022. If the loan is not repaid in full on or before December 31, 2022, it may be extended to December 31, 2025 but interest will then be charged at a rate of 5%.
To qualify, these organizations will need to demonstrate they paid between $20,000 to $1.5 million in total payroll in 2019. This program is now available and interested businesses should be able to apply for the CEBA through their current financial institution’s website.
To qualify, an organization must also confirm that:
- It is not a government organization, government body or an entity owned by a government organization or body;
- It is not a union, charitable, religious or fraternal organization or entity owned by such an organization or if it is, it is a registered T2 or 3010 corporation that generates a portion of its revenue from the sales of goods or services;
- It is not an entity owned by individual(s) holding public office; and
- It does not promote violence, incent hatred or discriminate on the basis of sex, gender, sexual orientation, race, ethnicity, religion, culture, region, education, age, or mental or physical disability.
Loan proceeds must be used to pay non-deferrable operating expenses of the business such as rent, payroll, insurance and property taxes. Funds may not be used for refinancing existing debt, paying dividends, or increases to management compensation.
Recent announcements that are not yet enacted
Changes to the CEBA were announced on April 19, 2020 by the Prime Minister. These announced changes include the following:
- The Canada Emergency Business Account will now be available to sole proprietors, corporations that pay dividends rather than salaries, and businesses that engage independent contractors rather than employees.
- The program will also be available to new businesses that have never filed a tax return and businesses that do not have a business bank account but operate through a personal bank account.
More information here.