What is the Canada Emergency Business Account (CEBA)?
We often find clients scrambling around at year-end trying to find documents It is an interest-free loan of up to $ 60,000 which is guaranteed and 100% funded by the Government of Canada.
Every applicant must meet the following criteria:
- Has an active CRA Business Number (BN) with an effective date of registration on or prior to March 1, 2020.
- Has an active business chequing/operating account with the Lender at the time of applying for CEBA. Note: If Borrower currently does not have a business chequing/operating account the Borrower must create one at their primary financial institution before applying for CEBA.
- Has not previously used the Canada Emergency Business Account Program (the “Program”) and will not apply for support under the Program at any other financial institution.
- Intends to continue to operate its business or to resume operations.
The CEBA application process follows one of two streams:
- the Payroll Stream (Applicants with employment income paid in the 2019 calendar year between CAD $20,000 and CAD $1,500,000) OR
- the Non-Deferrable Expense Stream (Applicants with Cdn.$20,000 or less in total employment income paid in the 2019 calendar year).
If you fall into the Non-Deferrable Expenses Stream you must also meet the following criteria:
- Have eligible non-deferrable expenses between Cdn. $ 40,000 and Cdn. $ 1,500,000. Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance. Expenses will be subject to verification and audit by the Government of Canada.
- Filed an income tax return with the CRA with a tax year ending in 2019 or, if its tax return for 2019 has not yet been submitted, 2018.
CEBA applications under the 2020 Eligible Non-Deferrable Expenses Stream will follow a three-step process:
Step 1: Complete the online Pre-Screen Tool. The Pre-Screen Tool is not a CEBA application and is solely intended to provide a non-binding indication of eligibility to inform your decision of whether to open a business account (if needed) and apply for CEBA at your financial institution. If you are declined at this step you can still apply for CEBA and therefore still need to complete the next two steps as identified.
Step 2: Businesses will initiate applications directly at their primary financial institution where they hold their primary business chequing /operating account. The financial institution will then direct applicants to Step 3 of the application process.
Step 3: Following the initial application through your financial institution, applicants will be directed to a CEBA website to provide supporting documentation of the 2020 Eligible Non-Deferrable Expenses and to complete the application.
The Government of Canada will assess application information submitted via financial institutions together with the supporting documentation and information provided in Step 3. If successful, the Government of Canada will notify your financial institution and provide funding for your CEBA loan.
Is there a deadline to apply?
All applicants have until March 31, 2021, to apply for $60,000 CEBA loan or the $20,000 expansion.
How do I know whether my application was approved or not?
Please wait for 5 to 7 business days after finalizing your application before checking your loan status on this loan status website or with the call centre. If you try before the 5 to 7 business days you will not receive an update. The loan status website will be able to address the following types of questions:
- What is the status of my application?
- Why was my application declined? How can I fix those errors (if applicable)?
All applicants are encouraged to check the status of their CEBA Loan online at https://status-statut.ceba-cuec.ca/, but if you continue to have questions you may call the CEBA Call Centre at 1-888-324-4201. The CEBA Call Centre is available Monday to Friday from 8 AM to 9 PM Eastern Standard Time, excluding statutory holidays.
Is there a restriction on how a business can use these funds?
The funds from this loan shall only be used by the Borrower to pay non-deferrable operating expenses of the Borrower including, without limitation, payroll, rent, utilities, insurance, property tax and regularly scheduled debt service, and may not be used to fund any payments or expenses such as prepayment/refinancing of existing indebtedness, payments of dividends, distributions and increases in management compensation.
How much of the loan would be forgiven and by what date do I have to repay it?
Repaying the balance of the loan on or before December 31, 2022, will result in loan forgiveness of 33 percent (up to $20,000).