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COVID-19 Canada Emergency Business Account (CEBA)

The Government of Canada recently started a $25 billion program on April 9th, 2020. This program has been set up to help small businesses that are experiencing reduced revenues because of the COVID-19 Epidemic in an effort to help cover operating costs.

The program is called the Canada Emergency Business Account (“CEBA”) which provides government-backed interest-free loans of up to $40,000 to small businesses and not-for-profits. These loans are being administered by Canadian Banks and have a 25% forgiveness rate of up to $10,000 if the balance of the loan is repaid on or before December 31, 2022.

To apply for a CEBA, the small business or not-for-profit should contact their current financial institution to initiate the application process. The eligibility requirements for the CEBA are as follows:

  • Must be a Canadian business that was operating as of March 1, 2020;
  • Must be a business registrant with the Canada Revenue Agency;
  • Must have a 2019 employee payroll between $50,000 to $1,000,000;
  • Must have an active business account with the financial institution that is processing the application. The business account must have been open on or prior to March 1, 2020 and the business cannot be in arrears on any existing loans with the financial institution by 90 days or more as of March 1, 2020;
    • Please note that sole proprietors who use a personal account for business will not be eligible for the CEBA.
  • The business has not previously used the CEBA and will not apply for further support under the program at another financial institution;
  • The business intends on continuing operations or resuming operations;
  • The business agrees to participate in post-funding surveys with the Government.

Any funds received from the CEBA shall only be used by the business to pay non-deferrable operating expenses such as payroll, rent, utilities, insurance, property tax, and regular debt payments. Accordingly, these funds can not be used to prepay future expenses, refinance existing debt and loans, pay dividends, or increase management compensation.

We hope the information discussed has given you some insight into the Canadian Emergency Business Account being administered by Canadian financial institutions.

We at Allan Marshall & Associates Inc. are always available free of charge to discuss any matters dealing with your credit and debt. Please email us or don’t hesitate to call us at 1-888-371-8900.