How to apply for the $40,000 Canada Emergency Business Account (“CEBA”)?

If repaid prior to December 31, 2022, 25% of the amount loaned ($10,000) will be forgiven. It also has no principal repayments during this period.

If the loan is not repaid by December 31, 2022, it can be converted into a 3-year term loan, and will be charged an interest rate of 5%, payable monthly. It will still not incur any principal payment requirements until December 31, 2025.

Eligible Businesses:

• The business must have a CRA Business Number and be operational on or before March 1, 2020.
• The business must have a bank account with a financial institution on or before March 1, 2020, and must be in good standing with that bank. Businesses that operate using a personal bank account will not be eligible. Businesses cannot apply at multiple banks.
• 2019 payroll of $50,000 to $1,000,000 as reported in Box 14 of the business’ 2019 T4 Summary.
• Types of eligible expenses include: payroll, rent, utilities, property tax, and scheduled payments on existing debt, etc.
• Expenses not eligible include: prepayment of existing debt, management bonuses, dividends, etc.

Application process:

• Businesses must apply directly through their primary financial institution and applications must be submitted online.
• Financial institutions are expected to start accepting applications by April 9^th.

Additional information:

• If you receive a loan through the CEBA, it does not preclude the business from participating in other COVID-19 programs, such as the 75% wage subsidy.
• Companies which are “Associated” for tax purposes, do not have to share the loan; each qualifying company in the corporate group can apply.
• Each business must make a separate application.
• No credit check will be performed during the approval process.

Regards,

Your HS & Partners Team