CEBA

The Canadian Emergency Business Account for Small Business (CEBA)

The government of Canada announced an extension of the CEBA program until October 31, 2020.  CEBA provides eligible small businesses with an interest free loan of $40,000 to help cover operating costs during a period of time where revenues have been temporarily reduced due to the economic impacts of COVID-19.  Applicants must qualify under one of the following options:

 

Payroll stream: 

  • Business must be open as of March 1, 2020 with an active account at 1st Choice Savings
  • Business must have a federal tax registration number
  • Business must have total payroll in the 2019 calendar year between $20,000 and $1,500,000 (as shown in Box 14 of the 2019 T4 Summary)

Non-deferrable expenses stream:

  • Business must be open as of March 1, 2020 with an active account at 1st Choice Savings
  • Business must have a federal tax registration number and filed a 2018 or 2019 tax return
  • Borrowers must have total payroll of less than $20,000 in 2019
  • Borrowers must have non-deferrable expenses between $40,000 and $1,500,000 in 2020
  • Examples of non-deferrable expenses are rent, insurance, property taxes, utilities and regularly scheduled debt service payments
  • Borrowers will be required to upload proof of eligible non-deferrable expenses to the government for final validation of the CEBA application

Applications could take as long as 15 business days for CEBA applications to be processed.  If approved, CEBA funds must be used to pay operating costs that cannot be deferred.  CEBA funds cannot be used for prepayment of existing debts, dividends or increases in management compensation.

CEBA Features:

  • Businesses can receive a one-time payment of $40,000
  • 0% interest (until December 31, 2022)
  • Repaying 75% of the balance of the loan on, or prior to December 31, 2022, could result in a 25% loan forgiveness (up to $10,000)
  • If the loan is not repaid by December 31, 2022, it can be converted into a 3-year term loan at an interest rate of 5% per annum
  • Principal payments can be made voluntarily at any time without fees or penalties

Application Process Expand/Collapse

If you wish to apply for a CEBA loan, please e-mail your request to CEBA@1stChoiceSavings.ca. Your e-mail must include the following information:

 height=  Legal business name and "operating as" name, if applicable

 height=  Signing authority name(s), phone number(s), and e-mail address(es)

Upon receipt of your e-mail request you will be contacted by a 1st Choice lending team member.

FAQ

How do I know if I qualify? Expand/Collapse

See 'Criteria' above.

How do I apply? Expand/Collapse

See ‘Application Process’ above.

What do I need to have ready to apply? Expand/Collapse

 height=  Legal business name and "operating as" name, if applicable.

 height=  Signing authority name(s), phone number(s), and e-mail address(es)

 height=  CRA Business Number (BN 15 characters - 9 digits, 2 alpha, 4 digits)

 height=  2019 T4 SUM (Box 14 of 2019 T4 SUM). If applying under the payroll steam*

 height=  Proof of eligible non-deferrable expenses


How long will it take for funds to show up in my account? Expand/Collapse

CEBA applications could take up to 15 business days to be processed and funded to your account.

What will my loan payments be? Expand/Collapse

The loan is interest-free until December 31, 2022.  No principal repayments are required during this period (unless you are seeking to repay 75% to qualify for the 25% forgiveness).

When will I need to start paying CEBA Back? Expand/Collapse

It is a good idea to start paying off CEBA as soon as you are able.

You have until December 31, 2022 to pay off CEBA interest free†. After this date, it will be converted into a 3-year term loan with a 5% interest rate per annum and interest payments will be required. However, no principal payments will be required until December 31, 2025.

The full balance, and all accrued interest must be paid no later than December 31, 2025.

Paying off $30,000 prior to December 31, 2022 may also result in a loan forgiveness of up to $10,000.

Can I pay it off before December 31, 2022? Expand/Collapse

Absolutely! If you can repay 75% ($30,000) of the loan on, or before December 31, 2022, it will result in a loan forgiveness of 25% ($10,000).

What if I am unable to pay off CEBA by Dec 31, 2022 Expand/Collapse

If you are unable to repay by December 31, 2022, it can be converted into a 3-year term loan at an interest rate of 5% per annum. The full balance, and all accrued interest, must be paid no later than December 31, 2025.
 

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