COVID-19 Financial Relief – Part 2: The CEBA

AF Accounting is helping you understand the benefit programs available from the Federal Government during the COVID-19 pandemic. In Part 1 of this series, we discussed the Canada Emergency Response Benefit (CERB). Part 2 talks about the Canada Emergency Business Account (CEBA).

What Is the Canada Emergency Business Account?

The CEBA is an interest-free loan of up to $40,000. It is provided to qualifying small businesses and non-profit organizations to help with operating costs and lost revenue. Up to $10,000 (25 per cent) of the loan will be forgiven if the balance is paid back before December 31, 2022.

Who is eligible for the CEBA?

To be eligible for this benefit, your business or non-profit organization must:

  • Be a Canadian business
  • Was in operation as of March 1, 2020
  • Has a federal tax registration
  • During the 2019 calendar year paid employment income between $50,000 and $1,000,000 CAD
  • Is an active client with an account opened before or on March 1, 2020 with the financial institution that will administer the loan, and that account cannot be in arrears for more than 90 days (as of March 1, 2020). Further, the company or non-profit cannot apply for the CEBA at any other financial institution.

Note that this is a one-time program. Borrowers cannot apply for it twice. They must also have plans to continue operating during the pandemic and participate, at a later date, in surveys about the funding.

Who is not eligible for the CEBA?

This program is not open to government-owned or operated organizations, businesses owned by politicians, or any business whose operation promotes hatred, violence, or discrimination.

Also, according to the Government of Canada, the applicant, “is not a union, charitable, religious or fraternal organization or an entity owned by such an organization or if it is, it is a registered T2 or T3010 corporation that generates a portion of its revenue from the sales of goods or services.”

How can CEBA funds be used?

There are restrictions on the loan. The money can only be used to pay certain operating expenses such as payroll, rent, utilities, insurance, property tax, and existing scheduled debt. It cannot be used to fund or incur new debt or be used for raises in compensation.

How to apply for the CEBA

The CEBA is implemented via financial institutions. To apply, you must contact the bank where your business or non-profit already has an account (and the account must be in good standing).

Understandably, banks, Canada Revenue Agency, and the Government of Canada are experiencing very high call volumes as people and businesses try to access COVID-19 benefit programs. Please be patient when calling for information. Leverage online sources for information and applications when possible.

Most banks are only accepting online applications for the CEBA at this time. The links below will take you to each bank’s CEBA information:

AF Accounting Will Help

AF Accounting is here for you during this time. Contact us if you have questions about the CEBA or any other COVID-19 benefit program available to Canadian individuals and small businesses.

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