How to qualify for the Canada Emergency Business Account

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Update for December 4, 2020
The government announced details of CEBA’s expansion. Businesses that are eligible for the initial $40,000 tranche of the program can now apply for an additional $20,000 - half of which may be forgivable. You can apply by contacting your bank.

The Canada Emergency Business Account is a loan program administered by your bank and guaranteed by the Canadian government. Eligible businesses will receive up to $60,000 interest-free, and up to $20,000 may be forgivable (meaning you don’t have to repay it).

Who qualifies?

Businesses are eligible if they had a 2019 payroll between $20,000 to $1.5 million, regardless of whether they’re incorporated or not. This is based on your T4 Summary, so payments to associates/contractors and sole proprietors paying themselves don’t count towards the payroll threshold.

Alternatively, businesses with payroll less than $20,000 will qualify if they meet the following criteria:

  • A business operating account at a participating financial institution (basically a business bank account)

    • As of October 26, 2020, eligible businesses that were previously operating through a personal bank account are now eligible. To qualify, the business must have been in operation on March 1, 2020, and must open a business bank account before applying.

  • You’ve filed a 2018 or 2019 tax return

  • You have eligible non-deferrable expenses between $40,000 and $1.5 million in 2020. Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance

    • You’ll be required to provide proof of your non-deferrable expenses at the time of application

    • The government has clarified that payments to independent contractors and fees required to maintain licences (like college regulatory fees) count towards this threshold

In either case, businesses must have a CRA Business Number (like an HST number of Payroll account) as of March 1, 2020; a business bank account (or will open one); and must intend to continue operating its business or resume operations.

How does it work?

Applications initially received up to $40,000, of which 25% could be forgivable. As of December 4, 2020, applicants can receive up to a further $20,000, of which half could be forgivable. In other words, you could receive up to $60,000, with $20,000 potentially forgivable.

The loan will be interest-free through December 31, 2022. If you repay the loan by December 31, 2022, the forgivable portion does not need to be repaid. The forgivable portion is 25% of the initial $40,000 loan and 50% of the subsequent $20,000 loan.

If you wish to continue the loan past December 31, 2022, you’ll work with your bank to convert it into a regular term loan.

You have to agree to use the loan for operating expenses that cannot be deferred, such as payroll, rent, utilities, insurance and property tax.

How do I apply?

Applications are now open. You can apply directly with your bank.