COVID-19: Government Updates Canada Emergency Business Account (CEBA⁠)

Canada Emergency Business Account Loan

COVID-19: Government Updates Canada Emergency Business Account (CEBA⁠)

What’s new with Canada Emergency Business Account (CEBA)?

Prime Minister Justin Trudeau announced the Canada Emergency Business Account (CEBA) is now available to businesses that have been using personal banking account. 

⁠CEBA provides 0% loans up to $40,000 to small business and non-profit organizations that have experienced reduced revenues due to COVID-19 but face ongoing costs, such as rent, insurance, utilities, taxes and wages. Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25 percent (up to $10,000).

To be eligible for the Canada Emergency Business Account (CEBA)…

  • Businesses must have been operating as a business as of March 1, 2020
  • Must successfully open a business account at a Canadian financial institution that is participating in CEBA
The deadline to apply for CEBA is December 31, 2020.

There may be other eligibility criteria that you have to adhere to so it’s always better to be safe than sorry.  Applicants can use the pre-screening tool on the CEBA website.  Applicants may contact the CEBA Call Centre at 1-888-324-4201 to receive a status update on a completed application between Monday to Friday from 8 a.m. to 9 p.m. EST.

 

Other points to know about  CEBA:

  1. To qualify for Canada Emergency Business Account, applicants must have:
    • An active Canada Revenue Agency (CRA) business number with an effective date of registration on or prior to March 1, 2020;
    • and either:
    • meet the payroll eligibility criteria; or
    • show a minimum of $40,000 in eligible non-deferrable expenses, and have filed a 2018 or 2019 tax return
  2. Since its launch, the government has made modifications to CEBA to help even more small businesses, including:
    • increasing the payroll eligibility range from between $50,000 and $1.0 million to between $20,000 and $1.5 million;
    • making CEBA available to owner-operated small businesses that do not have a payroll, sole proprietors receiving business income directly, as well as family-owned corporations remunerating in the form of dividends rather than payroll.
  3. For businesses that have received or are expecting to receive CEBA funding, it’s important to know the restrictions that apply on use of CEBA funds. The criteria for use of CEBA funds specifically requires that the funds be used to fund non-deferrable operating costs of the businesses.

The CEBA loan program may be subject to review by the government at a later date to ensure compliance, i.e. CRA Review or Audit.  If businesses are found to have not used the funds for eligible purposes they may risk losing access to the 0% interest rate or forgiveness components of the loan.

We can also help you determine whether or not you are eligible for CEBA and advise you what documentation you would require if your business were to undergo an CRA audit in the future. Feel free to book an appointment with us.  We would be happy to help!