COVID-19: Canada Emergency Business Account – Changes to Eligibility Criteria – Coronavirus (COVID-19)

Canada: COVID-19: Emergency Account for Canadian Businesses – Changes to Eligibility Criteria

What is the Canada Business Emergency Account?

The Government of Canada recently launched the new Canada Emergency Account for businesses (CEBA) loan, which has been implemented by eligible financial institutions (the “Lender”) in conjunction with Export Development Canada (EDC).

The CEBA is part of the federal government’s loan program for small and medium-sized businesses affected by COVID-19 to ensure businesses have access to the capital they need in these uncertain times.

The $ 25 billion program will provide interest-free loans of up to $ 40,000 to small businesses and nonprofits, to help cover their operating costs during a time when their revenues have been temporarily reduced .

CEBA offers eligible organizations a loan of $ 40,000 at 0% interest until December 31, 2022. The remaining balance is then converted into a 3-year term loan at an interest rate of 5% per annum. . Repayment of the loan balance by December 31, 2022 will result in a 25% loan forgiveness (up to $ 10,000).

What are the eligibility conditions for CEBA?

According to Government of Canada, an eligible organization must:

• Be a Canadian company in operation on March 1, 2020;
• Have a federal tax registration;
• Demonstrate that he paid between $ 20,000 and $ 1,500,000 in total employment income during the 2019 calendar year;
• Have an active checking / operating account with the lender, which is their primary financial institution. This account must have been opened on or before March 1, 2020 and was not past due on existing borrowing facilities, if any, with the lender for 90 days or more as of March 1, 2020;
• has not previously used the program and will not seek program support from another financial institution;
• Acknowledge their intention to continue to exercise their activity or to resume their activities; and
• Agree to participate in post-funding surveys conducted by the Government of Canada or one of its agents.

In addition, according to the requirements of the CEBA program, each organization must also confirm:

• It is not a government organization or body, nor an entity owned by a government organization or body;
• It is not a trade union, charitable, religious or fraternal organization or an entity belonging to such an organization or if it is, it is a T2 or T3010 registered company which generates part of its income from the sale of goods or services;
• It is not an entity owned by natural persons exercising a political function; and
• It does not promote violence, incite hatred or discriminate on the basis of sex, gender, sexual orientation, race, ethnicity, religion, culture , region, education, age or mental or physical disability.

Are there any restrictions on how I can use CEBA funds?

CEBA loan funds can only be used by the borrower to pay for non-deferral operating expenses such as payroll, rent, utilities, insurance, property taxes, and regularly scheduled debt service.

The CEBA loan can not be used to fund payments or expenses such as prepayment / refinancing of existing debt, dividend payments, distributions and increases in executive compensation

How can I apply?

Eligible organizations must apply online through their primary bank or financial institution.

Applicants should have the following information prepared when applying:

• Legal and operating name (s) of your business;
• Total paid employment income (the amount reported in box 14 of your T4SUM 2019);
• Your 15-digit Canada Revenue Agency business number or employer account number; and
• Authorization to certify and bind your company to CEBA conditions on behalf of your organization.

How can Crowe Soberman support you?

In these uncertain times, it is essential to remain agile and proactive as the COVID-19 situation evolves. Getting access to financial experts, insight and insight as quickly as possible is essential, and this is where we can help.

We have set up a dedicated COVID-19 resource center, highlighting areas of business activity that will likely be affected by the coronavirus. Whether you need to discuss your current financial situation and know your options, or want to be guided through the appropriate cash management strategies for your business, our team of experts are ready to help. help you every step of the way. .

We are in the same boat.

04/16/2020

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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