CLIENT UPDATE (Amended April 23, 2020) Canada Emergency Business Account (CEBA)

The Government of Canada recently announced the launch of the Canada Emergency Business Account (CEBA). The CEBA will be implemented through eligible financial institutions which we expect will include most commercial banks in Canada. Some banks have already started releasing details on the application process so please contact your financial institution for more details on how you can apply. 

While many of the finer details have yet to be released, the Government of Canada has announced the following regarding the CEBA:

  • Loans are currently available to qualifying businesses through most major Canadian banking institutions;
  • Interest-free loans of up to $40,000 are available to small businesses and not-for-profit organizations to help cover their operating costs that cannot be deferred (i.e. rent, utilities, payroll, etc.);
  • If the loan is repaid by December 31, 2022, 25% (up to $10,000) of the loan will be forgiven;
  • If the loan is not repaid by December 31, 2022, it can be converted to a 3-year term loan with an interest rate of 5%; and,
  • To qualify, organizations must:
    • Be an operating business and not a holding company;
    • Have incurred between $20,000 and $1.5 million in payroll expenses in 2019 which must be supported by the 2019 T4 summary; (previous requirement of $50,000 to $1 million)
    • Demonstrate that revenues have been temporarily reduced (not yet defined); and,
    • Be considered a small business (not yet defined) or not-for-profit organization.

For more information, click HERE.

Based on the new releases issued by some financial institutions, it appears that the primary way for these loans to be issued will be using online banking applications. Therefore, if you are interested in applying for the CEBA and are not yet set up for online banking, getting registered now may help facilitate the issuance of these loans. 

We will continue to provide updates on these loans as more details become available. We are happy to discuss any questions you may have about these matters.

This summary deals with proposed matters that are complex and may not apply to particular facts and circumstances. As well, the material and the references contained therein reflect laws and practices which are subject to change. For these reasons, this material should not be relied upon as a substitute for specialized professional advice in connection with any particular matter.

Although this communication has been carefully prepared, Wilkinson & Company LLP does not accept any legal responsibility for its contents or for any consequences arising from its use.  No part of this document may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means (photocopying, electronic, mechanical, recording or otherwise).