Canada Emergency Business Account (CEBA)

(UPDATED January 14, 2022)

Visit the Government of Canada’s website here for more details.

CEBA loans have opened for businesses that do not have payroll. Previously these loans were only open for businesses that had between 20K and 1.5M of payroll.

Most corporations other than holding companies should be able to qualify for this program as long as they have a bank account and at least $40,000 of expenses per year (including debt service payments). Notably candidates under the expanded criteria would be landlords, doctors, and farmers. Note that partners of professional service firms (i.e. lawyers) “might” be able to qualify, please reach out to your contact at BBLLP for more details.

The key terms of the program are as follows:

  • The business (which could be a sole proprietorship) will receive a loan from their financial institution of $60,000
  • The loan is interest free, payment free, and fee free until December 31, 2023.
  • If $40,000 of the load is repaid by December 31, 2023 then the remaining $20,000 balance will be forgiven

In order for the business to qualify the following criteria must be satisfied:

  • Have filed an income tax return with CRA in the past.
  • Have an active operating account with a financial institution opened on or prior to March 1, 2020 and was not in arrears on existing borrowing facilities, if applicable with the financial institution by 90 days or more as at March 1, 2020.
  • Has not previously used the program (and the legal entity that contains the business has not used the program)
  • Must acknowledge its intention to continue to operate its business or to resume operations
  • Agree to participate in post-funding surveys conducted by the government
  • The $40,000 of proceeds must be spent on non-deferrable expenses
  • The business must have applied by June 30, 2021.

In addition to the above the business must qualify under one of two streams:

  • Payroll Stream – which requires the business to have paid at least $20,000 in wages during the 2019 calendar year. When qualifying under this stream the business must provide the total wages paid according to the T4 Summary in 2019.
  • Non-Deferrable Expenses Stream – requires the business to submit documentation showing that the business will incur $40,000 in eligible non-deferrable expenses in 2020. This is done in a separate step at a specific government portal and will be reviewed by the government (not the financial institution).

Non-deferrable expenses include the following:

  • Payroll
  • Rent
  • Utilities
  • Insurance
  • Property tax
  • Regularly scheduled debt service
  • Other expenses that cannot be deferred

Non-deferrable expenses do not include the following:

  • Prepayment/refinancing of existing indebtedness
  • Payments of dividends
  • Distributions
  • Increases in management compensation

For the Non-Deferrable Expenses Stream the business must have $40,000 of “Eligible Non-Deferrable expenses” which are defined as follows:

  • Wages and other employment expenses to independent (arm’s length) third parties
  • Rent or lease payments for real estate used for business purposes
  • Payments incurred for insurance related costs
  • Payments incurred for property taxes
  • Payments incurred for business purposes for telephone and utilities in the form of gas, oil, electricity, water and internet
  • Payments for regularly scheduled debt service
  • Payments incurred under agreements with independent contractors and fees required in order to maintain licenses, authorizations or permissions necessary to conduct business
  • When calculating the Non-Deferrable Expenses of a business other COVID-19 government relief should be subtracted (for example if the business received the Canada Emergency Commercial Rent Assistance, the rent expenses should be reduced)