Canada Emergency Business Account
The new Canada Emergency Business Account will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced.
Up to $10,000 of that amount will be eligible for complete forgiveness if $30,000 is fully repaid on or before December 31, 2022.
It can be converted into a 3-year term loan charging an interest rate of 5%.
The government previously announced that the expanded Canada Emergency Business Account (CEBA) program would launch on Friday, June 19. Unfortunately, there will be a slight delay in the roll-out of the application process for the expanded program.
You must complete the CEBA application at your primary financial institution by latest August 31st, 2020.
After completing the application with your financial institution, you must upload supporting documentation by latest September 3rd, 2020.
- Non-Deferrable Expenses Stream (Extended)
- Businesses with total employment income paid to employees in 2019 of $20,000 or less and 2020 Eligible Non-Deferrable Expenses (subject to adjustments for support or subsidies under other Government of Canada COVID response programs) greater than $40,000 and less than $1,500,000.
- Payroll Stream (Original)
- Businesses with total employment income paid to employees in 2019 greater than $20,000 and less than $1,500,000.
- The Borrower is a Canadian operating business in operation as of March 1, 2020.
- The Borrower has a federal tax registration.
- The Borrower has a Canada Revenue Agency business number and has filed a 2018 or 2019 tax return.
- The Borrower has an active business chequing/operating account with the Lender, which is its primary financial institution. This account was opened on or prior to March 1, 2020.
- The Borrower has not previously used the Program and will not apply for support under the Program at any other financial institution.
The Eligible Non-Deferrable Expense categories are the following
Expenses are considered “Eligible Non-Deferrable Expenses” if they were already incurred in January and/or February 2020, or are due to a legal or contractual obligation as at March 1 and cannot be avoided or deferred beyond 2020 even during a period of shut down and depressed revenues as a result of COVID.
- Wages and other employment expenses to independent (arm’s length) third parties
- Wages and other employment expenses to independent (arm’s length) third parties include payments on account of employees – e.g. salary, employment insurance premium, benefits (e.g. pension, medical/dental), or bonuses.
- Rent or lease payments for real estate used for business purposes;
- Rent or lease payments for capital equipment used for business purposes;
- Capital equipment used for business purposes includes, machinery, computer equipment, furniture, and other durable equipment (e.g. vehicle, tractor, marine vessel).
- Payments incurred for insurance-related costs;
- Insurance-related costs pertaining to items such as property, professional liability, vehicle, and business interruption are considered eligible non-deferrable expenses so long as the insurance coverage protects the business entity..
- Payments incurred for property taxes;
- Payments incurred for business purposes for telephone and utilities in the form of gas, oil, electricity, water and internet;
- Payments for regularly scheduled debt service;
- Payments incurred under agreements with independent contractors and fees required in order to maintain licenses, authorizations or permissions necessary to conduct business by the Borrower.
- Fees required in order to maintain licenses, authorizations or permissions necessary to conduct business include, professional dues for licensed professionals, fishing licenses, and taxi medallions. This expense category may also include payments for the use of intellectual property (e.g. software licensing and subscriptions) and patent fees to the extent that it is required to conduct business.
- Payments incurred for materials consumed to produce a product ordinarily offered for sale by the Borrower.* July 2020 updated
- Payments incurred for materials consumed to produce a product ordinarily offered for sale by the Borrower reflects payments for input materials that are consumed or transformed in producing, or become part of, the product that is ordinarily offered for sale, such as raw materials, ingredients, supplies, seed or livestock feed. Finished goods’ inventory or purchases of capital assets are not included.
Dividends are not an Eligible Non-Deferrable Expense.