The Canada Emergency Business Account (CEBA) expansion, announced May 19th, will allow more Canadian small businesses to access interest free loans that will help cover operating costs during a period when revenues have been reduced, due to the pandemic.

The program will now be available to a greater number of businesses. Namely, the program is now available to sole proprietors who receive income directly from their businesses, businesses that rely on contractors, and family-owned corporations that pay employees using dividends (versus payroll).

To qualify under the expanded eligibility criteria, applicants with a payroll lower than $20,000 would need:

  • A business operating account at a participating financial institution;
  • A Canada Revenue Agency business number;
  • To have filed a 2018 or 2019 tax return; and
  • To have eligible non-deferrable expenses between $40,000 and $1.5 million. Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance.

 

WHAT WE ALREADY KNOW ABOUT CEBA:

  • 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%.
  • 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.

WHO IS ELIGIBLE?

  • Canadian-operated businesses that have federal tax registration and a payroll in the 2019 calendar year of between $50,000* and $1.5-million, verifiable by Canada Revenue Agency documentation (a T4 summary of remuneration paid, or T4SUM), are eligible. ​​
  • Now available (May 18 update) for sole proprietors who receive income directly from their businesses, businesses that rely on contractors, and family-owned corporations that pay employees using dividends (versus payroll).
  • *See new expanded criteria for May 19th update for payroll of $20,000 or less.

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
 
To learn more about this program visit The Government of Canada’s CEBA FAQ.