CEBA: More Businesses Qualify for a $40K Interest-Free Loan

Evelyn Jacks

On April 16, 2020 the federal government announced that the payroll threshold for businesses qualifying for the Canada Emergency Benefit Account (CEBA) has been reduced from $50,000 to $20,000 and increased at the upper end  from $1 million to $1.5 million. Additional commercial rent relief measures to help SMEs will be introduced soon. Here are the details you need to know:

What is the CEBA?  Businesses and non-profits can qualify to receive an interest-free loan of up to $40,000 if their revenues have been reduced due to COVID-19. There is no specific criteria on how much your revenues have to decrease to qualify for this program.

Further, 25% of this – up to $10,000 – will be forgiven if the loan is repaid by December 31, 2022.  It’s a $25 billion program offered through financial institutions in co-operation with Export Development Canada (EDC).

How to get the CEBA:  Loan candidates will need to apply to their financial institution and meet four basic criteria to qualify.

• The business. Yours is a Canadian operating business in operation as of March 1, 2020 with a federal tax registration and you intend to continue to operate this business or resume its operations.

• The payroll. You paid total employment income between $20,000 and $1,500,000 in the 2019 calendar year.

• The relationship with the financial institution. You have an active business chequing/operating account with the Lender, your primary financial institution, having been opened on or prior to March 1, 2020. You must not be in arrears on existing borrowing facilities with this lender by 90 days or more as at March 1, 2020, and will  not have previously used this program or applied for support under this program with any other financial institution.
• Follow-up. You must agree to participate in post-funding surveys conducted by the Government of Canada or any of its agents.

What should the money be used for?  You must use the money to pay for non-deferrable operating expenses like payroll, rent, utilities, insurance and property taxes and/or regularly scheduled debt servicing. You cannot use it to prepay or refinance existing debt, pay dividends, distributions and increases in management compensation. Be sure you can back that up in an audit trail.

Who is ineligible?  You won’t qualify if you are a government organization, body or entity owned by either. Neither will a union, charitable, religious or fraternal organization registered or owned by one, or if so, it is a registered T2 or T3010 corporation generating some revenue from the sale of goods or services. 

Yours cannot be an entity owned by anyone holding political office, nor can your business must not promote violence, incite hatred or discriminate on the basis of sex, gender, sexual orientation, race, ethnicity, religion, education, age, mental or physical disability. 

For more information as it happens, be sure to take in the Virtual CE Summit on May 13. Enrol online or call us at 1-866-953-4769.

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