According to new numbers from Statistics Canada, more than half of Canadian companies have reportedly lost at least 20 percent of their revenue because of COVID-19. This survey had 12,600 Canadian companies fill up a questionnaire between April 3rd and 24 to see how the pandemic has affected their business.

Overall, more than 80 percent of businesses across the country reported a medium to high drop in demand for their services and products.  Clearly, the impact of this pandemic was and is still evident on the Canadian economy. For these reasons, the Canadian government came up with the CEBA.

The CEBA or Canadian Emergency Business Account is a loan that the Canadian government provides to businesses that have been severely impacted by the pandemic. It is a straight-up $40,000 interest-free loan with no adjustments whatsoever. The amount is fixed and would be provided to eligible businesses upon securing the loan. Companies can use this money to cover various expenses that they cannot defer during the lockdown, such as payroll, rent, property taxes, and other payments.

If that’s not enough, 25 percent of the loan is entirely forgivable if you pay back the loan amount by December 31st, 2022. This is like getting $10,000 in free money. If you can’t repay the loan by December 31st, 2022, it will be converted to a 3-year installment loan with a 5 percent interest rate. You will have to pay back the loan in monthly installments, and the first payment will be due on January 31st, 2023.

Eligibility Criteria for the CEBA

There is a lot of confusion and chaos regarding who can apply for this loan. Let’s break it down.

First of all, the entire process takes less than three minutes to complete if you are eligible. The money, however,can take up to 5 working business days to get transferred to your bank account. Your bank will set up a line of credit that will be available to you in a separate account.

The eligibility requirements are:

  1. You need to be a Canadian company which has been in operation as of March 1st, 2020.
  2. You also need to have a federal tax registration number.
  3. You need an active business checking account with a participating financial institution that is part of CEBA.
  4. You need to have non-deferrable expenses (rent, property tax, utility expenses, etc.) between $40k and $1.5m.
  5. Alternatively, you need to have payroll expenses between $20k to $1.5m.

If you’re a contractor who doesn’t have non-deferrable expenses between $40k to $1.5m, then you don’t qualify for it. As for the need to have an active checking account with one of the participating banks, this is important because the CEBA is facilitated through these banks. Don’t worry though, as the list of the institutions involved is pretty extensive. This means the chances of your financial institution being a part of this program is high.

You don’t necessarily have to prove that your business is struggling to apply for this loan. If you are a Canadian company that meets all the requirements, you are still eligible to apply for the CEBA to help support your business operations during the pandemic.

How to apply for the CEBA

As mentioned above, this entire program is facilitated by participating financial institutions. You can check if your financial institution is part of this program here. After verification, you can contact your financial institution directly to learn how to register for the CEBA through them.

Limitations of the CEBA

The CEBA is an excellent initiative by the Canadian government to help out businesses in need of monetary help during the COVID-19 pandemic. However, there has been enough criticism of the program for not being all-inclusive and leaving contractors, family businesses, and other businesses like salons out of the equation.

The good news is the government is constantly listening to suggestions and trying to make this opportunity as inclusive as possible. If your business is currently not qualified for this program, we encourage you to be on the lookout for updates on their website. In the meantime, you may want to check out Rate Genie for personal loans and other financial services that you can take advantage of to help your business weather the impact of COVID-19. Best of luck!