On Tuesday, Prime Minister Justin Trudeau announced that eligibility criteria for Canada Emergency Business Account (CEBA) has been expanded to include more small businesses.
The CEBA offers interest-free loans of up to $40,000 to small businesses and not-for-profits. The program will now be available to businesses with sole proprietors, those that rely on contractors, and family-owned businesses that pay employees through dividends rather than payroll.
Trudeau highlighted companies such as hair salon owners, independent gyms, and local physio businesses will now be eligible. He added that more details on the expanded criteria will be provided shortly.
The president and CEO of the Canadian Federation of Independent Business (CFIB), Dan Kelly, called this a significant expansion to CEBA.
Very pleased to hear PM @JustinTrudeau announcing plans for a significant expansion to the CEBA program. This will soon include those paying w dividends, those hiring contractors & those renting chairs (eg. salons). CFIB appreciates that govt has listened to our advice.
— Dan Kelly (@CFIB) May 19, 2020
To qualify under the expanded eligibility criteria, applicants with payroll lower than $20,000 are required to have a business operating account at a participating financial institution; a Canada Revenue Agency business number, and to have filed a 2018 or 2019 tax return; and eligible non-deferrable expenses (such as rent, property taxes, utilities, and insurance) between $40,000 and $1.5 million.
The CEBA is administered by Export Development Canada (EDC), which works with Canadian financial institutions including banks and credit unions to deliver the loans. The $40,000 loans have zero-interest and are partially forgivable (25 percent) if repaid by December 31, 2022. The CEBA is meant for businesses that have experienced diminished revenues due to COVID-19, and face ongoing non-deferrable costs such as rent, utilities, insurance, taxes, and employment costs.
Trudeau said that, to date, more than 600,000 small businesses have accessed the CEBA, which reportedly amounts to more than $24 billion in credit. More details, including the launch date for applications under the new criteria, are set to be provided in the coming days.
The federal government is also working on other “potential solutions” around CEBA. The prime minister noted that Minister of Small Business Mary Ng is working to offer support to business owners and entrepreneurs who operate through their personal bank account, as opposed to a business account, or have yet to file a tax return, such as newly created businesses.
In his official statement on today’s expanded eligibility criteria, Kelly said it is “encouraging to hear that new businesses and those with personal bank accounts will soon be included through a separate stream of the program.”
He called it “critical” that the expansion announced today be rolled out “as quickly as possible,” adding that these businesses had been excluded from CEBA and faced two months “with little assistance and are now facing another rent deadline of June 1st.”