Applications open for $40,000 CEBA small business loans

CEBA is a Government of Canada relief program designed to help businesses access loans to stay afloat during COVID-19.

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The $55 billion program offers federally guaranteed loans of up to $40,000 to small businesses and not-for-profits that are interest-free for the first year.

Under the program’s terms, repaying the balance of CEBA loans received on or before December 31, 2022 results in loan forgiveness of 25 percent (up to a total of $10,000).

Under the expanded eligibility requirements, applicants with payroll lower than $20,000 require a business operating account at a participating financial institution, a Canada Revenue Agency business number, and a 2018 or 2019 tax return. They also need eligible non-deferrable expenses of between $40,000 and $1.5 million.

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“This fix has been a long time coming and will help many who pay with dividends, pay contractors or rent chairs.”

Companies can apply for CEBA through their financial institutions. The program is delivered by Export Development Canada, which works with Canadian financial institutions, including banks and credit unions, to deliver the loans.

Eligible applicants who have applied and submitted all necessary documentation, they “should expect” to receive funding within 10 to 15 business days.

“Finally,” wrote Dan Kelly, president and CEO of the Canadian Federation of Independent Business (CFIB), in a tweet reacting to Morneau’s announcement. “This fix has been a long time coming and will help many who pay with dividends, pay contractors or rent chairs (like salons).”

Kelly has been a vocal critic of the time it took the federal government to launch the expanded CEBA program, which it announced over a month ago, citing difficulties facing small firms that were initially excluded. CFIB said it is pleased by the result, but not content: it wants the program to be expanded even further.

“Tens of thousands of new small firms and those without business bank accounts will continue to wait for the next round of enhancements,” Kelly added, reiterating CFIB’s intention to continue lobbying the federal government until all small firms have access to CEBA. CFIB is also advocating for CEBA to be increased to $60,000 and forgiven at a rate of 50 percent upon repayment.

Businesses that bank through a personal bank account remain ineligible for CEBA. Only companies with business chequing or operating accounts opened on or before March 1, 2020 qualify for the program.

According to the federal government, more than 669,000 CEBA loans have been approved by financial institutions as of June 15. These loans represent a total of approximately $26 billion in credit.

In his press briefing last Friday, Prime Minister Justin Trudeau urged eligible businesses to take advantage of the Canada Emergency Wage Subsidy (CEWS). CEWS aims to take pressure off employers by subsidizing 75 percent of employee’s wages during the pandemic. Thus far, the program has seen a lower than expected level of demand. As of June 22, 515,420 CEWS applications have been approved, worth a total of approximately $15.77 billion. The overall cost of the program was pegged at $73 billion.

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Written by Skeena Strong

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