TurboTax wants to ensure accuracy with the information we have provided in this article, all content will be updated as we learn more from the Canada Revenue Agency and the Government of Canada.
What is the Canada Emergency Business Account?
Canada Emergency Business Account (CEBA) is intended to provide financial support to businesses struggling to cover their expenses, that are not able to defer through this pandemic.
Originally, this program provided loans of up to $40,000 to small businesses and not-for-profits which started on April 9th, 2020. The loans were interest-free for a period of one year, with the potential of up to $10,000 of loan forgiveness (25%), if the balance of the loan is repaid on or before December 31, 2022. You had to have an active business/chequing account as of March 1st, 2020 in order to be eligible for this program.
As of October 26th, 2020, businesses could apply after opening a chequing account with their financial institution. And the support was expanded from $40,000 to $60,000.
Which Businesses will qualify?
CEBA will benefit many Canadian small businesses:
- Have an active Business number with CRA
- Have a business/chequing account with the lender at the time of application
- Have not received CEBA previously
- Intend to continue business operation or resume operation
- The Payroll stream: If your payroll amount is between $20,000 and $1,500,000 in 2019
- The Non-Deferrable Expense Stream: If your payroll amount is less than $20,000in 2019
How to apply for the CEBA?
If you fall under the payroll stream, you will apply for the CEBA directly with your financial institutions. The government of Canada will assess the application and inform your financial institution of their decision. This program is implemented by the eligible financial institutions, in cooperation with Export Development Canada.
If you fall under the non-deferrable expenses stream, you must also meet the following criteria:
- Have eligible non-deferrable expenses between $40,000 and $1,500,000. Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance. these expenses will be verified and audited by the Government of Canada.
- Filed an income tax return with the CRA in 2019 or, if 2019 has not been filed, they will refer to your 2018 return.
Complete the online pre-screening which is solely intended to provide you with information on your eligibility. In order to complete the application process, you must apply directly with the financial institution that holds your business chequing account. They will then guide you to the CEBA website to provide supporting documents of your 2020 non-deferrable expenses.
Eligible Non-Deferrable Expenses (such as wages, rent, insurance, property taxes, payments made to independent contractors, utilities, rent or lease of capital equipment); are expenses;
- incurred in January or February 2020
- or, if you had a contractual/legal obligation as of March 1st, 2020
- that cannot be avoided or deferred beyond 2020, even during a period of shutting down and decreased revenue due to COVID.
CEBA is not intended to provide income support or support for variable operating expenses to businesses.
Other Financial Support
In addition to the CEBA, the Business Credit Availability Program (BCAP) was also established. It helps support access to financing for Canadian businesses.
Export Development Canada and the Business Development Bank of Canada are providing $65B of financial support, working closely with the private sector lenders.
Which Businesses will qualify?
BCAP will benefit many Canadian small businesses which:
- Have viable business models, and
- Would otherwise be restricted to financing
How to apply for the BCAP?
Eligible businesses interested in applying for the BCAP will apply directly with their financial institutions. This program is implemented by the eligible financial institutions, in cooperation with Export Development Canada.
For more details on income support and other benefits as part of the Federal Government’s Economic Response Plan for COVID-19, click here.
See also our COVID-19: Tax Info Centre, from our TurboTax Support team, answering many FAQs on this topic and more.
Accounting educator, business strategist, and advisor.
Turbo Tax Canada blog editor and writer.
Susan has been an accounting professional for over 20 years, and has been working with businesses and individuals and their taxes for the past 12. Education is a passion for Susan, and when not writing or talking about tax for TurboTax Canada, she can be found speaking at events, teaching at Mohawk College, and working with many businesses and entrepreneurs through her own accounting advisory practice. Susan is known to be approachable but pulls no punches when it comes to the reality of business finance and taxes.