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.