Canada Emergency Business Account (“CEBA”)

The plan qualification criteria have changed.

As part of its response to the COVID-19 crisis, the Federal government has introduced the CEBA program. This is to help small businesses and not-for-profits cover their operating costs that cannot be deferred during a period when their revenues have been reduced.

Under the CEBA program, the government will guarantee loans of up to $40,000.

Businesses or not-for-profits are eligible to apply for a CEBA loan if they:

  • Are an operating business registered in Canada as of March 1, 2020.
  • Have an annual payroll, based on their 2019 T4 Summary, of between $20,000 and $1,500,000 (previously $50,000 and $2,000,000).
  • Use the borrowed funds to pay for operating costs that cannot be deferred, such as payroll, rent, utilities, insurance and property taxes.

December 31, 2022 is an important date:

  • If loans under the program are repaid by December 31, 2022, up to 25% of the loan balance can be forgiven, to a maximum of $10,000 (i.e. $30,000 of the loan is repaid).
  • Until December 31, 2022 loans issued under the program will be interest-free with no fees. In addition, there will be no penalties for cancelation or early repayment of the loan.
  • Principal payments are not required until December 31, 2022.
  • After December 31, 2022, the loan, if not repaid, will be converted to a loan with commercial terms.

CEBA loans can be arranged online through borrowers’ primary financial institutions. Application procedures in place with most major lenders.

CEBA loan applications must:

  • Be made by individuals authorized to bind the organization.
  • Be supported by the CRA payroll account number and employment income reported in Box 14 of the 2019 T4 Summary.
  • Include borrower representations that:
    • The loan will be used to fund operating costs that cannot be deferred, and
    • The borrower has not applied for a CEBA loan from any other financial institution and is aware that doing so, could result in prosecution by the Federal government.
Background Shape Background Shape Background Shape Background Shape Background Shape

Partner with Miller Bernstein