CEBA and How It Can Help Your Business: Your Resource Guide
Want to know the who, what, where, when, why, and how of the Canadian Emergency Bank Account or CEBA? Then have a read below for all the info you need, provided by our partners at Scotiabank!
What is the Canada Emergency Business Account or CEBA?
The CEBA is a loan of $40,000 provided by the Federal Government. It’s interest-free until December 31, 2022 to support businesses that have been affected by COVID-19. Loans are being administered by a number of FIs across Canada.
How does a business owner know if they are eligible for CEBA?
Check online: Many businesses registered in Canada, open with an operating account as of March 1, 2020, with payroll between $20,000 and $1.5 million in 2019, are eligible. Find payroll information on your 2019 T4SUM or: Summary of Renumeration Paid document.
How does a business owner apply for CEBA?
Eligible businesses must apply through the bank that holds their main operating account that was open on or before March 1, 2020. Every bank is administering the CEBA differently: check your bank’s website and communications for specifics. Some banks, like Scotiabank, offer their customers a quick online application process that can be completed in minutes.
What information is essential for business owners to have in order to complete the CEBA application?
To apply, you will need your: 2019 T4SUM, 15-digit CRA business number, and banking information, including bank account and transit number. For Scotiabank’s online application, you’ll need access to online banking.
What happens after the business owner successfully applies for the CEBA, and what can the funds be used for?
These are government funds facilitated by your bank, so expect to receive the $40,000 in about 5 business days from approval. Funds are to be used to pay for operating costs that cannot be deferred, like payroll, rent, utilities, property tax etc.
What details and terms do business owners need to know about CEBA?
CEBA is a $40,000 loan that is interest free, with no payments required until December 31, 2022. $10,000 of the loan is eligible for forgiveness if the business pays back $30,000 by December 31, 2022.
Are there any hidden fees for CEBA, and what does the business owner need to do to ensure the $10,000 is forgiven?
There are no fees for CEBA. To qualify for the $10,000 forgiveness, a balance of $40,000 must be maintained until December 31, 2020. If you repay $30,000 between January 1, 2021 and December 31, 2022, the remaining $10,000 balance will be forgiven.
What if the business is not able to pay back the $30,000 of CEBA by December 31, 2022?
On January 1, 2023, any amount still owing will be converted into a 3-year term loan with 5% interest. The remaining balance is to be paid in full no later than December 31, 2025. Check your bank’s website for full details on the repayment terms.
What can business owners who don’t qualify for CEBA do?
Explore other relief programs offered by all levels of government and learn if you meet their eligibility requirements. Revisit relief programs regularly: some have expanded since being introduced. Find out if your business qualifies for any other industry relief programs available. Speak with your banking Advisor to find out about their relief programs to help ease the pressure on your cash flow including payment deferrals.
Aside from relief programs, what else can a business owner do to support their business during COVID-19?
Revisit your business plan. Know your strengths & weaknesses. Be open to creativity. Explore other distribution models or what a reinvention could look like. Communicate with staff, suppliers, advisors and customers. Ask for help when you need it.
Final tips for business owners who are being affected by COVID-19?
Apply for CEBA: it’s a good first step for relief. Explore other relief programs like Canada Emergency Wage Subsidy (CEWS). Enrol in direct deposit to get CRA payments deposited faster and more securely into your business account. Know your business and have key documents available before applying for any relief program. Mark calendar with key dates for CEBA repayment terms. Ask for help when you need it. Be kind. We’re all in this together.