Expanded Canada Emergency Business Account (Dec 2020)

Canada Emergency Business Account Expansion

Expanded Canada Emergency Business Account (CEBA)

As of December 4, 2020, the government increased the amount of loans available under the Canada Emergency Business Account (CEBA) from $40,000 to $60,000.

Qualification Criteria

The CEBA is available to small businesses and charities and not-for-profit organizations actively carrying on a business in Canada (including a related business in the case of a registered charity). These include small businesses that do not have a payroll, sole proprietors who are not incorporated and earn their income directly, and family-owned businesses who pay family members with dividends rather than salaries.

In order to be eligible for the CEBA, applicants will need to meet the following conditions:

  • Be in operation on or prior to March 1, 2020 with an active Business Number (BN) with the Canada Revenue Agency (CRA);
  • Create a business bank account at their primary institution prior to applying for CEBA (under the original program in the spring, it was required to have a business bank account as of March 1, 2020 but this restriction has recently been relaxed; applicants can now open this bank account at the time they do their CEBA application);
  • Have not previously used the CEBA and will not apply under the program at any other financial institution. If an organization has already applied for a $40,000 loan, they are now, as of December 4, 2020, able to apply for the additional $20,000 loan;
  • Must intend to continue to operate its business or to resume operations.

There are two streams under which an organization can apply – the Payroll Stream and the Eligible Non-Deferrable Expense Stream.

Payroll Stream – Under this stream, applicants must have had total payroll between $20,000 and $1.5 million in 2019.

Eligible Non-Deferrable Expense Stream – Under this stream, available to organizations that did not have sufficient payroll in 2019, applicants must have a CRA BN and filed a 2018 or 2019 tax return, and have eligible non-deferrable expenses between $40,000 and $1.5 million, such as rent, property tax, utilities and insurance. Organizations that are in receipt of other government COVID-response programs, such as the Canada Emergency Wage Subsidy and Canada Emergency Rent Subsidy, should bear in mind that adjustments may be needed in determining their eligible non-deferrable expenses for CEBA purposes.

Allowable Uses

  • Wages and other employment expenses to independent (arm’s length) third parties;
  • Rent or lease payments for real estate;
  • Rent or lease payments for capital equipment;
  • Insurance related expenses;
  • Property taxes;
  • Telephone and utility expenses (such as gas, oil, electricity, water and internet);
  • Payments for regularly scheduled debt service;
  • Payments incurred under agreements with independent contractors;
  • Fees required in order to maintain licenses, authorizations or permissions necessary to conduct business;
  • Materials consumed to produce a product ordinarily offered for sale by the borrower.

Funds obtained from the CEBA cannot be used for prepayment or refinancing of existing indebtedness, payments of dividends, distributions and increases in management compensation.

The loan will be funded as a $60,000 term loan to approved businesses, at 0% interest. If the conditions of the CEBA program are met, up to $20,000 of the loans will be forgiven. However, if the loan is not repaid by December 31, 2022, it can be converted to a three-year term loan with a 5% interest rate.

Application Process

There are two CEBA application streams:

1. For businesses with total employment income paid to employees in 2019 greater than $20,000 and less than $1,500,000:

  • Please e-mail your request to ceba@sparkcu.ca. Your e-mail must include the following information:
    • Legal business name and "operating as" name, if applicable
    • Signing authority name(s), phone number(s), and e-mail address(es)
    • CRA Business Number (BN 15 characters - 9 digits, 2 alpha, 4 digits)
    • 2019 T4 SUM (Box 14 of 2019 T4 SUM)
  • Once we have all of the required information, we will contact you with the next steps
  1. For businesses with total employment income paid to employees in 2019 of $20,000 or less and 2020 eligible non-deferrable expenses greater than $40,000 and less than $1,500,000:
  • Step 1: Businesses will initiate applications directly at their financial institution where they hold their primary business chequing/ operating account.
  • Step 2: Following the initial application through your financial institution, applicants will be directed to a CEBA website to provide supporting documentation of the 2020 eligible non-deferrable expenses and to complete the application. A document upload instruction guide is available here. Please have the following information ready:
    • The name of the financial institution where you submitted your application; and
    • Your 9-digit business number (same number you used in your application with your financial institution); and
    • Electronic or paper copies of Receipts / Invoices / Agreements to be uploaded as evidence of your 2020 Eligible Non-Deferrable Expenses.

The Government of Canada will assess application information submitted via financial institutions in Step 1 together with the supporting documentation and information provided in Step 2. If successful, the Government of Canada will notify your financial institution and provide funding for your CEBA loan.

Please be advised that the June 30, 2021 CEBA Application Period Deadline Has Passed

New applicants can no longer apply for a $60,000 CEBA loan or the $20,000 expansion.

For more information, visit: https://ceba-cuec.ca/