What is a CEBA loan?
It’s interest-free financing for small businesses that will help in covering operating costs when revenues are down! CEBA Small Business Loan is a $55 billion program. It provides interest-free loans of up to $60,000 to small businesses and not-for-profits. The Government of Canada is providing the Canada Emergency Business Account (CEBA) to support Canadian businesses that have been facing uncertainty and financial hardship during the COVID-19 pandemic. Eligible businesses will be approved by the Government of Canada to get access to a CEBA small business loan. Funds will help you in paying off non-deferrable operating expenses such as rent, utilities, taxes, payroll, employment costs and insurance which are treated as the critical factor to sustain business continuity. The government is providing support of the CEBA loan program to adversely affected kinds of small businesses to keep staying in business. It also searches online as a COVID small business loan.
CEBA small business loan program launched on April 9, 2020. It provided a $40,000, zero-interest, partially forgivable loan to small businesses that experienced decreased revenues due to Coronavirus and faced ongoing non-deferrable costs. By assisting these businesses in servicing their non-deferrable costs. Canada Emergency Business Account (CEBA) is intended to facilitate the post-COVID resumption of normal business operations.
COVID-19 financial support extended to a second CEBA loan of up to $20,000 for eligible businesses facing financial hardship as a result of the COVID-19 pandemic on December 4, 2020. The CEBA loan program now expands an additional $20,000 for businesses that have previously received a $40,000 loan. Half of this additional financial support, up to $10,000 will be forgivable if the loan is repaid by December 31, 2022. Moreover, repaying the balance of the loan on or before December 31, 2022, will result in loan forgiveness of 33 percent (up to $20,000). CEBA small business loan also offers a $60,000 interest-free loan to new eligible applicants. Remember, the deadline to apply for a loan is March 31, 2021.
|CEBA up to date:||#|
|Number of businesses approved for CEBA loans||823,935|
|Number of businesses approved for CEBA expansions||424,277|
|Total funds approved for CEBA loans and expansions||$41.87 Billion|
How to apply for CEBA loan?
Businesses should contact their financial institution to apply for a CEBA loan. There are approximately 220 financial institutions participating in the CEBA program that include banks, credit unions and other financial institutions. If you have already applied for a loan then you can check your loan application status at https://status-statut.ceba-cuec.ca/
What are the CEBA loan repayment terms?
The following CEBA repayment terms apply to all CEBA loans (original loan and expansion loan):
- Interest: 0% per annum interest until December 31, 2022. 5% per annum interest starting on January 1, 2023. Interest payment frequency will be determined by your financial institution.
- Repayments & Maturity: No principal repayment required before December 31, 2022. If the loan remains outstanding after December 31, 2022; only interest payments required until the full principal is due on December 31, 2025.
- Debt Forgiveness: If the outstanding principal, other than the amount of potential debt forgiveness, is repaid by December 31, 2022. The remaining principal amount will be forgiven, provided that no default under the Loan has occurred.
CEBA loan eligibility
Who qualifies for CEBA? Every applicant must meet the following criteria:
- Has an active CRA Business Number (BN) with an effective date of registration on or before March 1, 2020.
- Has an active business chequing/operating account with the Lender at the time of applying for CEBA. Note: If Borrower currently does not have a business chequing/operating account; the Borrower must create one at their primary financial institution before applying for CEBA.
- Has not previously used the Canada Emergency Business Account Program (the “Program”) and will not apply for support under the Program at any other financial institution.
- Intends to continue to operate its business or to resume operations.
Every new applicant for the $60,000 loan uses the government’s CEBA Pre-Screen Tool before completing an online application. It will help you in determining if you’re likely to qualify or not. Remember, the Pre-Screen Tool is not a CEBA loan application, it will just provide a non-binding indication of eligibility that will assist your decision on whether to apply for CEBA at your financial institution. You are still able to apply if you feel you qualify.
CEBA is available from more than 220 financial institutions across the country. Check the FAQ section that offers a complete list of financial institutions that currently offer CEBA. For more information and update you should visit the official website of the Government of Canada; Canada Emergency Business Account (CEBA).