The federal government has taken measures to help both Canadian businesses and families during the COVID-19 pandemic. While the Canadian Emergency Response Benefit targets individuals who have lost income due to COVID-19, the Canada Emergency Business Account (CEBA) supports small and medium businesses as well as not-for-profits. From determining whether you’re eligible for the program to understanding which documents to prepare, here’s everything you need to know about the CEBA.
What is the CEBA?
The CEBA is a subset of the Canadian government’s loan program. As aforementioned, it targets small and medium businesses as well as not-for-profits that have been affected by COVID-19. The CEBA is a $25 billion program that gives a $40,000 loan to eligible businesses so that they can meet their financial obligations. Its goal is to better position these recipients so that they are able to quickly return to providing their services to our communities.
Note, however, that the loan is only interest free until December 31, 2022. In addition, up to 25% of each loan, or $10,000, can be forgiven if the rest is also paid by then. If the business is unable to repay the full amount by this date, the loan can be turned into a 3-year term with an interest rate of 5%.
To find an exhaustive list of requirements to be eligible for the CEBA, please see the following link. A general summary of these requirements state that the borrower/applicant must:
- Be a Canadian-operated business that has a federal tax registration
- Have a total employment income paid in the 2019 calendar year be between $20,000 and $1,500,000
- Intend to continue its operations
- Have an active business operating account with the lender, which is its primary financial institution.
How Can You Apply?
Those businesses and not-for-profits who meet the above-mentioned qualifications can apply for the CEBA through their primary financial institution.
What You’ll Need
Be prepared and have your documents ready to ensure that your application process goes smoothly and as quick as possible. As a general rule of thumb, have the following on hand:
- Your banking credentials.
- The legal and operating name of your business.
- Your Canada Revenue Agency (CRA) business number. This number can be found at the top of your 2019 T4 Summary of Remuneration Paid (T4SUM).
- Your total employment income paid. Note that this value must match the amount reported in Box 14 of your 2019 T4SUM.
Should you require more information and guidance with the application process or the eligibility criteria, Sodagar & Co. can service your needs remotely. Please click the following link to understand how our Firm is responding and adapting to the COVID-19 pandemic.