On Thursday, April 9, banks officially opened up applications for the $40,000 interest-free loan program introduced by the federal government as a way to support small businesses.
Canadian banks have begun enrolment for the Canada Emergency Business Account, which is meant to provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover operating costs for businesses that have seen a reduction in revenue during COVID-19.
UPDATE (16/04/2020): The federal government has since updated the criteria for this program. More details on the new criteria can be found here.
Businesses interested in applying for the loans must go through their current financial institution.
The Canadian Bankers Association, which represents more than 60 domestic and foreign banks in Canada, stated that funds are expected to begin flowing shortly.
Businesses interested in applying for the loans must go through their current financial institution. Many of Canada’s big banks have introduced online application platforms specifically for their clients to apply for the federal loan program.
In order to be eligible for the program, businesses must have paid $20,000 to $1.5 million in salaries in 2019, as declared on their T4 summary. When Prime Minister announced the loans as part of the government’s broader emergency COVID-19 plan he noted that the loans will be guaranteed by the government and around $10,000 may be forgivable for qualifying businesses.
The launch of the program comes after talks between financial institutions and the government last weekend, where the government pushed for a five-day waiting period from when applications are submitted to when businesses could receive the loan. According to The Globe and Mail, the idea behind the five day waiting period was to allow for sufficient vetting. The delay was a sticking point in the discussions, with banks pushing for quicker turn around time.
On Wednesday, Finance Minister Bill Morneau said the government hopes the loans will be processed within about two days. He noted, however, that timing will vary by company and institution.
The Canada Emergency Business Account is one of two credit programs that the federal government has introduced as part of its emergency plan. The Business Credit Availability Program (BCAP) is set to provide $40 billion through various loan programs being administered through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC).