The COVID-19 pandemic has wreaked havoc on businesses globally, and Canada is no exception. As a result of the pandemic, many businesses have suffered revenue losses and have had to cut down on their staff. To help alleviate the impacts of the pandemic on Canadian small to medium-sized businesses, the government of Canada introduced the Canada Emergency Business Account (CEBA) loan in March 2020.
This loan is intended to help businesses with their operating expenses and to provide immediate relief during the pandemic. In this blog post, we will walk you through everything you need to know about the CEBA loan, including who is eligible, how to apply, and when you’ll need to repay it.
CEBA Loan Eligibility:
To apply for a CEBA loan, your business must meet the following criteria:
– Your business must have been operating as of March 1, 2020.
– You have a registered Canadian business number.
– Your eligible non-deferrable expenses should range between $20,000 – $1,500,000
– An active business chequing or operating account must have been opened before March 1, 2020
– The employer must have paid between $20,000 and $1.5 million in payroll expenses in 2019.
– Your business must have been economically impacted by the COVID-19 pandemic.
If you meet these requirements, you can apply for the CEBA loan through your financial institution. With the loan, businesses can cover fixed non-deferrable costs like rent, utilities, and insurance.
CEBA Loan Application Process:
To apply for a CEBA loan, contact your bank. The loan application contains your name, business number, and confirmatory statement of the payroll expenses incurred last year. Your lender will verify your information, and if all the eligibility criteria are met, they’ll notify you once the process is complete.
CEBA Loan Repayment:
Initially, the CEBA was an interest-free loan of up to $40,000. The government has since updated the terms. So now, businesses that pay the loan back in full by December 31, 2022, may be eligible for forgiveness of up to 25% ($10,000). However, if you don’t pay the loan back in full, or your loan balance is not paid by December 31, 2022, your loan will be converted to a three-year term loan at 5% interest.
CEBA Loan Refinancing:
CEBA Loans can be refinanced for up to $20,000, increasing the program’s total loan amount to $60,000, a portion of which will be forgivable if repaid on time. The new application process for the CEBA expansion will open on July 5, 2021. In addition, the deadline for new applications for the main CEBA program is extended to September 30.
In summary, with the CEBA loan, Canadian business owners can now significantly minimize the impacts of the pandemic on their businesses and stay afloat. The loan offers a substantial opportunity for small to medium-sized businesses to access funds that will help keep them afloat during these uncertain times. It is vital to keep in mind that CEBA loans are only available to eligible businesses, so it’s essential to get all the information you need before making your application.