As a result of Covid-19, many small and medium-sized businesses are experiencing tough times. During this unprecedented time, BPF Solutions has been helping many small businesses not only survive but be positioned to grow. Most of the time, lack of knowledge, not having prepared documents and even misunderstanding of rules, do not allow businesses to grow and benefit from the tools and this is where BPF Solutions comes into help. Besides, we always advise taking advantage of the opportunities and benefit from the tools offered by the Government. Here is one of the supporting tools by the Government of Canada that may be helpful to you.
What is CEBA?
The Canada Emergency Business Account (CEBA) is part of an economic response plan by the Government of Canada to help Canadian businesses cope with the COVID-19 pandemic. CEBA is now available to businesses that have been operating out of a non-business banking account. The reasons behind this plan are to help businesses keep their doors open, keep their workforce on payroll, protect the employment that Canadians rely on and recover rapidly when the time comes.
Eligibility & Requirement
According to this program, applicants must have the following conditions in order to apply for that:
1- An active CRA Business Number (BN) with a registration date effective on or before 1 March 2020.
2- An active checking/operating business account with the lender at the time of the CEBA filing.
3-The CEBA Program has not previously been used and will not refer to any other financial institution for assistance under the Program.
4-Aims to continue to run the business or to resume activities.
CEBA Loan Amount
CEBA provides small business and non-profit organizations with zero-interest loans of up to $40,000 that have encountered reduced sales due to COVID-19 but face ongoing non-deferrable expenses such as rent, utilities, insurance, taxes and wages. Repaying the loan balance on or before December 31, 2022, would result in 25 percent (up to $10,000) of loan forgiveness. However, the additional CEBA loan is being expanded to $60,000 for eligible businesses, of which a total of $20,000 would be forgiven if the balance of the loan is repaid before December 31, 2022. An attestation of the impact of COVID-19 on the business will be required to access additional financing.
To qualify under the expanded eligibility rules, CEBA applicants with 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.
CEBA applications process follow either of two streams:
1– The Payroll Stream (Applicants with income between C$20,000 and C$1,500,000 in 2019)
2– The Non-Deferrable Expense Stream (Applicants with C$20,000 or less income in 2019)
It should be considered that applicants with a payroll of $20,000 or less in 2019 will have to show qualifying non-deferrable expense between C40,000 dollars and C$1,500,000 (rent, property taxes, utilities, and insurance)
As of 26 October 2020, eligibility for CEBA has been softened, so qualifying businesses can now apply to their primary financial institution after opening a company checking/operating account. Businesses should apply for a CEBA loan by contacting their financial institution. In the CEBA program, approximately 220 financial institutions are participating. The validation of pre-funding eligibility is based on requirements set down by the Government of Canada. No organization involved in administering the CEBA program has the authority to grant exceptions, including your financial institution. The CEBA application deadline is 31 December 2020.
All rejected applicants, along with the reasons for the decline, will be contacted directly by their financial institution. If there is a need to include extra details or make a change, an applicant may re-apply.
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