Applications open for expanded $40,000 CEBA small business loans

Small business taking payment

Applications for the expanded federal Canada Emergency Business Account (CEBA) loan program have opened, and are now available through Canada’s large banks. Canadian Finance Minister Bill Morneau announced the news via Twitter late last night.

The expanded CEBA “is being made available gradually,” starting with larger banks.

Businesses that were initially excluded by CEBA qualify for the expanded program according to its new criteria. Under CEBA’s revised terms, sole proprietors, farmers, and businesses who use contractors or pay themselves through dividends rather than payroll are now eligible.

Applications for the expanded program were initially supposed to be available last Friday, but were delayed to ensure CEBA “can properly launch,” according to Canada’s Department of Finance.

“The expanded CEBA will be available through Canada’s large banks tomorrow,” wrote Morneau in a tweet. “More lenders, like credit unions, will be offering this product in the very near future. We know many small businesses have been waiting patiently in these trying times—help is on the way.”

According to the program’s website, the expanded CEBA “is being made available gradually by more than 230 financial institutions across the country, starting with the larger banks.” Smaller financial institutions will begin to offer it “over the coming weeks.”

RELATED: Government expands criteria of $40,000 small business CEBA loan program

CEBA is a Government of Canada relief program designed to help businesses access loans to stay afloat during COVID-19. The $55 billion program offers federally guaranteed loans of up to $40,000 to small businesses and not-for-profits that are interest-free for the first year.

Under the program’s terms, repaying the balance of CEBA loans received on or before December 31, 2022 results in loan forgiveness of 25 percent (up to a total of $10,000).

Under the expanded eligibility requirements, applicants with payroll lower than $20,000 require a business operating account at a participating financial institution, a Canada Revenue Agency business number, and a 2018 or 2019 tax return. They also need eligible non-deferrable expenses of between $40,000 and $1.5 million.

“This fix has been a long time coming and will help many who pay with dividends, pay contractors or rent chairs.”

Companies can apply for CEBA through their financial institutions. The program is delivered by Export Development Canada, which works with Canadian financial institutions, including banks and credit unions, to deliver the loans.

Eligible applicants who have applied and submitted all necessary documentation, they “should expect” to receive funding within 10 to 15 business days.

“Finally,” wrote Dan Kelly, president and CEO of the Canadian Federation of Independent Business (CFIB), in a tweet reacting to Morneau’s announcement. “This fix has been a long time coming and will help many who pay with dividends, pay contractors or rent chairs (like salons).”

Kelly has been a vocal critic of the time it took the federal government to launch the expanded CEBA program, which it announced over a month ago, citing difficulties facing small firms that were initially excluded. CFIB said it is pleased by the result, but not content: it wants the program to be expanded even further.

“Tens of thousands of new small firms and those without business bank accounts will continue to wait for the next round of enhancements,” Kelly added, reiterating CFIB’s intention to continue lobbying the federal government until all small firms have access to CEBA. CFIB is also advocating for CEBA to be increased to $60,000 and forgiven at a rate of 50 percent upon repayment.

RELATED: Availability of expanded $40,000 CEBA small business loans delayed

Businesses that bank through a personal bank account remain ineligible for CEBA. Only companies with business chequing or operating accounts opened on or before March 1, 2020 qualify for the program.

According to the federal government, more than 669,000 CEBA loans have been approved by financial institutions as of June 15. These loans represent a total of approximately $26 billion in credit.

In his press briefing last Friday, Prime Minister Justin Trudeau urged eligible businesses to take advantage of the Canada Emergency Wage Subsidy (CEWS). CEWS aims to take pressure off employers by subsidizing 75 percent of employee’s wages during the pandemic. Thus far, the program has seen a lower than expected level of demand.

As of June 22, 515,420 CEWS applications have been approved, worth a total of approximately $15.77 billion. The overall cost of the program was pegged at $73 billion.

Canada’s tech sector has recently called for the CEWS program to be expanded. According to a recent survey of hundreds of Canadian tech leaders, 72 percent of respondents remain ineligible for the program.

Image source Matthew Henry via Burst

Josh Scott

Josh Scott

Josh Scott is a BetaKit reporter focused on telling in-depth Canadian tech stories and breaking news. His coverage is more complete than his moustache.

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