Canada Emergency Business Accounts
On March 27, 2020 the Government announced (along with other announcements) that the business will have access to the Canada Emergency Business Account (CEBA) through the financial institutions.
Basics of CEBA
- $40,000 government guaranteed loan to help eligible businesses pay for operating expenses, payroll and other expenses
- CEBA will be funded a revolving line of credit for $40,000 until December 31, 2020
- After December 31, 2020, any outstanding balance will be converted into a non-revolving 5 year term loan WITHOUT INTEREST until January 1, 2023 (see notes on interest below)
- The term loan will mature on December 31, 2025
- Balance outstanding on December 31, 2025 must be paid in full at that time
- After January 1, 2023, interest will accrue on the outstanding balance at 5% per annum – payable monthly
- the REAL HELP – if you pay 75% of the term loan (i.e. balance that you will have at the end 2020) before December 31, 2022, the remaining balance will be forgiven
Eligibility Criteria
These are Government requirement and not set by the individuals institutions.
- You will need an business account (as your primary account) with the institution through which you will be enrolling in the program
- Your business account must have been opened before March 1, 2020. I believe it is ok if the institution through which you are applying was not your primary institution prior to March 1, as long as the account existed before that date.
- Your business has been a registered and operational business before March 1, 2020
- The person applying for the program must have authority in the business (i.e. must have authority to bind the corporation)
- Your had payroll expense is between $50,000 and $1 million. You will need to provide confirmation on this based on 2019 numbers. You can confirm with the institution the specific documents you will need to provide.
- You will need to agree to use funds from this loan to pay ONLY for operating costs that CANNOT be deferred (e.g. payroll, rent, utilities, insurance, etc.)
Steps if you have multiple owners/directors
You will need to prepare and for all directors to sign appropriate resolutions or minutes to confirm that the person dealing with the institution has the authority to apply for CEBA and deal with all matters relating to CEBA. If you need help on this, please do not hesitate to call me.
Do you have multiple businesses?
The qualification is based on a “per business” basis and not on a “per owner” basis. If each business meets the criteria, each business may apply for CEBA relief.
Next Steps
I am sure that all banks will be busy dealing with this. I suggest you contact your business account manager as soon as possible to understand what will be required to support the application and start gathering the information now.
If you need help with any corporation documentation, please do not hesitate to call to discuss.
All the best in your business.
