We caution readers that due to the fluidity of the situation that the information may change on a daily basis. We will continue to update the examples as new information is provided. This post was created on April 8th, 2020.
On March 27, 2020, the Federal Government announced the Canada Emergency Business Account connected to Covid-19 as an additional measure to provide financing for businesses.
The FAQ below is intended to provide further guidance on the COVID-19 Canada Emergency Business Account, also known as the CEBA.
Do you have questions about other COVID-19 topics? Please see all of our COVID-19 articles here.
Emergency Business Account Summary
- The program is estimated to be available in mid-April, 2020 and is a $40,000 business loan/line-of-credit. Based on the websites of some financial institutions, applications may be accepted as early as the week of April 6, 2020.
- Financial Institutions will administer the program and applications.
- The loan will be guaranteed by the Government of Canada and will be interest free for the first year.
- If the loan is repaid before December 31, 2022, up to $10,000 of the loan may be forgiven.
- Eligible businesses include small business and not-for-profits that have experienced temporarily reduced revenues due to COVID-19.
- The applicant must demonstrate they paid between $20,000 and $1.5 million in total payroll in 2019. More details on eligibility and the application process will be provided as the details are released.
Emergency Business Account FAQ
1. What is the Emergency Business Account for Businesses?
The Emergency Business Account for businesses is a loan of $40,000 to assist small businesses and not-for-profits who have experienced temporarily reduced revenues due to COVID-19.
2. Am I eligible for the loan?
This loan is intended for small business and not-for-profits that paid between $20,000 and $1.5 million in payroll in the 2019 calendar year. The loans issued under the CEBA program are guaranteed by the government and should therefore be available to businesses that may not otherwise have been approved for financing.
3. What are the terms of the loan?
The loans of up to $40,000 will be interest-free until December 31, 2022. The interest rate to be applied on January 1, 2023 and the repayment terms must be negotiated with your financial institution. The full loan balance with accrued interest is due on December 31, 2025 and it appears the interest rate will be fixed at 5%.
4. How much of the loan can be forgiven?
Up to $10,000 of the $40,000 may be forgiven if repaid before December 31, 2022. As an example, if you repay $30,000 of the $40,000 loan on or before December 31, 2022, the remaining $10,000 may be forgiven.
5. How can I use the loan?
The loan is to be used for short-term operating expenses, such as payroll and other business costs that cannot be deferred. The loan is not intended for personal use.
6. How do I apply for the loan?
To apply for the CEBA, you must contact the financial institution that you currently use for your business accounts. It appears that financial institutions will make the program available on-line only.
If you do not have on-line access for your business accounts and wish to apply for the CEBA, it is recommended you set up on-line access as soon as possible with your financial institution.
You may apply for the CEBA loan at one financial institution only, being the financial institution where your business accounts are registered. Some financial institutions have indicated on their websites that your business accounts must have been opened on March 1, 2020 at the latest.
7. What documentation do I need to apply?
At a minimum you will need to provide the lender a copy of the 2019 T4 Summary for your business to demonstrate the total remuneration paid.
8. What if I have more than one business?
Each registered business is entitled to apply for the loan as long as the threshold for payroll and other criteria is met. An authorized person of the business must be the individual who applies on behalf of the business.
9. What if my business is benefiting from other COVID-19 programs?
Your eligibility for the CEBA is not affected by your participation in other COVID-19 benefit programs or subsidies.
10. When will I receive the loan?
The timing of applications at different financial institutions may vary slightly. Check the website of you financial institution or call your business account manager for more details on applying and processing times.
Please contact any Millards location if you have questions regarding Canada’s COVID-19 Emergency Business Account. Like so many of the client businesses we serve, Millards Chartered Professional Accountants has adopted COVID-19 procedures and protocols to guide safe interaction with others. In an effort to maintain social distancing, please contact us via phone or email only. Please continue to visit this website for further details on our current policies.