The Government of Canada is expanding the eligibility criteria under its highly-popular Canada Emergency Business Account (CEBA) program to enable more owner-operated small businesses to qualify.
Announced in March, CEBA is a loan program under which Canadian businesses and nonprofits can obtain a $40,000 interest-free loan from their bank to help cover operating costs during the pandemic. Repaying the balance of the loan on or before Dec. 31, 2022 will result in loan forgiveness of 25% (up to $10,000).
In order to qualify, businesses currently have to meet the following conditions:
- Be a Canadian operating business in operation as of March 1, 2020,
- Have a federal tax registration,
- Have paid $20k-$1.5M in total employment income in the 2019 calendar year,
- Have an active business chequing/ operating account with the Lender, which is its primary financial institution, opened on or prior to March 1,
- Not be in arrears on existing borrowing facilities with the Lender by 90 days or more as at March 1,
- Have only applied once,
- Intend to continue to operate its business or to resume operations, and
- Agree to participate in post-funding surveys.
On Monday, the Government expanded the criteria to include sole proprietors receiving income directly from their businesses, businesses that rely on contractors, and family-owned corporations that pay employees through dividends. To qualify under the new eligibility criteria, applicants with payroll lower than $20,000 would need:
- A business operating account at a participating financial institution,
- A Canada Revenue Agency business number,
- To have filed a 2018 or 2019 tax return, and
- Have eligible non-deferrable expenses of $40k-$1.5M.
Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance. The launch date for newly eligible applicants has yet to be announced.
To date, more than 600,000 small businesses have received a CEBA loan, representing $24 billion in credit.
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