Focus On

More small businesses can apply June 19 for CEBA $40,000 no-interest loans

Monday, June 15, 2020 @ 3:26 PM | By Cristin Schmitz


Ottawa will begin taking applications June 19 under the expanded eligibility criteria it announced last month for accessing the Canada Emergency Business Account (CEBA) — a federal program of interest-free, partially forgivable loans of up to $40,000 for owner-operated small businesses financially hit by the COVID-19 pandemic.

Prime Minister Justin Trudeau announced during his daily COVID-19 update in Ottawa June 15 that applications will be accepted as of June 19.

He also indicated, without providing details, that his government intends to extend the availability of the Canada Emergency Response Benefit (CERB) for jobless workers — a program relied on by millions of people whose benefits are restricted to four months.

(The CERB provides $500 per week, for a maximum of 16 weeks. It is available from March 15 to Oct. 3, 2020. The application deadline is Dec. 2, 2020.)

“In the last few weeks, things have started to look up for a lot of people — but that said, we also know that far too many Canadians are still struggling,” Trudeau said. “If you’re having troubles finding a job, you shouldn’t also be worrying about whether you’ll hit the limit of your CERB benefits. So right now, we’re working on a solution to extend the benefit for people who can’t return to work yet. We'll have more details later this week but for today, I want you to know that we will continue to be there for you and your family.”

Trudeau also noted that in his weekly discussion with premiers last week there was “broad consensus across the provinces” that the current border ban on non-essential travel from the United States should remain in place.

(The temporary ban on all discretionary/optional travel at the Canada-U.S. border continues until at least June 21.)

“We will keep discussing with ... the United States administration on ways forward, but our priority on this is to ensure that we’re keeping Canadians safe while continuing to ensure the flow of essential goods and services,” Trudeau said.

The expansion of the CEBA, which the prime minister first announced May 19, 2020, opens the door to borrowing by owner-operated small businesses that had been ineligible for the program because: they lacked a payroll (e.g. rely on contractors); are sole proprietors receiving business income directly; or are family-owned corporations who pay employees through dividends rather than payroll.

According to a June 15 government press release, to qualify under the expanded CEBA eligibility rules, applicants with a payroll lower than $20,000 will need:
  • a business operating account at a participating financial institution;
  • a Canada Revenue Agency business number;
  • a 2018 or 2019 tax return; and
  • eligible non-deferrable expenses of between $40,000 and $1.5 million.

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 more than 200 Canadian financial institutions to deliver the loans to their existing business banking customers. More information on the expanded CEBA is available here.

The government noted that since the CEBA’s launch in the wake of the pandemic, more than 669,000 loans have been approved, totalling more than $26 billion in disbursed credit.