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Ottawa to expand access to CEBA loans; Canada-U.S. border restrictions extended by 30 days

Tuesday, May 19, 2020 @ 2:16 PM | By Cristin Schmitz

The present ban of non-essential travel over the Canada-U.S. border will be extended beyond May 21, Prime Minister Justin Trudeau has confirmed, while announcing also expanded eligibility for the Canada Emergency Business Account (CEBA) so that more owner-operated small businesses financially hit by the COVID-19 pandemic will be able access interest-free, partially forgivable loans of up to $40,000.

Trudeau confirmed during his daily COVID-19 briefing in Ottawa May 19, that the Canada-U.S. border controls set to expire May 21 — which limit cross-border travel to commercial traffic and essential workers — will be extended by 30 days, by agreement with the U.S., and as endorsed by the provinces.

The prime minister also said that the CEBA loan program will be made available to more businesses, in particular: sole proprietors receiving income directly from their businesses; businesses that rely on contractors; and family-owned corporations that pay employees through dividends rather than payroll.

“For example, for a hair salon owner with stylists who rent chairs; for a local physiotherapist; for an independent gym owner with contracted trainers — this is for you,” Trudeau said, adding that the government will announce “very soon” when owners can apply.

Trudeau also disclosed that Ottawa is working on “potential solutions” to assist business owners and entrepreneurs who operate through their personal bank accounts, rather than through business accounts, as well as for those who have yet to file a tax return, such as newly created businesses.

He suggested that if businesses still don’t meet the expanded eligibility criteria for the CEBA they should contact their local federal regional development agencies, which recently received more funding.

To qualify under the expanded CEBA eligibility criteria, the government said applicants with a payroll lower than $20,000 would need:
  • A business operating account at a participating financial institution, a Canada Revenue Agency business number, and to have filed a 2018 or 2019 tax return; and
  • Eligible non-deferrable expenses between $40,000 and $1.5 million, which could include such costs as rent, property taxes, utilities, and insurance.

A press release from the Prime Minister’s Office indicated that further details, including the launch date for applications under the new eligibility criteria, “will follow in the days to come.”

The federal government noted that claimed expenses will be subject to verification and audit, and that the funding will be delivered in partnership with financial institutions.

The government said more than 600,000 small businesses have so far accessed more than $24 billion in credit from the CEBA since the initiative was launched April 9, 2020.

The government-backed loan program provides zero-interest, partially-forgivable loans of up to $40,000 to small businesses that have experienced diminished revenues due to COVID-19, but face ongoing non-deferrable costs such as rent, utilities, insurance, taxes and employment costs. One-quarter of the loan is forgivable if it is repaid by Dec. 31, 2022.

The CEBA is administered by Export Development Canada, which works with Canadian financial institutions to deliver the loans to their existing business banking customers.

When it was first launched, the CEBA was designed to allow for rapid deployment of credit to businesses with a 2019 payroll between $50,000 and $1 million. The government then expanded the scope of the program, by increasing the payroll eligibility range to between $20,000 and $1.5 million.