CEBA Update: Availability and Extension
Since the start of the COVID-19 pandemic, businesses of all sizes have been struggling to stay afloat. To help them cope with the financial challenges, the Canadian government introduced the Canada Emergency Business Account (CEBA) in March 2020. Under CEBA, small businesses could apply for interest-free loans of up to $40,000 to pay for non-deferrable expenses such as rent, utilities, and salaries. However, given the length and severity of the pandemic, the government has revised the eligibility criteria and extended the availability and repayment terms of the loan. In this blog, we discuss the latest CEBA update and explain how businesses can benefit from it.
1. Availability and Revised Eligibility:
The eligibility criteria for CEBA have been modified to include more small businesses. Now, businesses that operate with a personal bank account are eligible to apply for CEBA support. Additionally, the program has been expanded to include businesses that have only paid employees through dividends, as well as those that have a revenue stream of more than $20,000 but less than $1.5 million in 2020. The program has also been extended to apply to new or additional businesses that didn’t get included in the first round of the scheme.
2. Loan Repayment:
To make it easier for small businesses to repay the loan, the government has introduced new extension and repayment arrangements. Those who took out a CEBA loan will have eight months before they start to incur interest. The government has granted an extension of the repayment deadline to June 30, 2022, giving businesses more time to repay the loan. Businesses that manage to pay 75% of their loan amount will be eligible for loan forgiveness of the remaining 25%, up to a limit of $10,000. Additionally, Canadian financial institutions will be offering CEBA loan refinancing options to those businesses that have already received CEBA loans.
3. CEBA Refinance:
Businesses that have already availed of the CEBA loan can opt for new refinancing options. They can refinance their loan up to $40,000, which would be interest-free, and an additional $20,000 would be interest-bearing. Refinanced CEBA loans would also have an expanded deadline for repayment in 2022.
4. CEBA News:
Businesses have until June 30, 2021, to apply for CEBA interest-free loans. However, given the unprecedented demand from the small business sector to get this loan, the government of Canada had mentioned, in their recent CEBA Update release, that the last date may be further expanded. So, if your small business is facing unprecedented challenges during the pandemic, make the most of this opportunity and apply for CEBA loans now.
CEBA has been a lifeline for many small businesses as they navigate through the COVID-19 pandemic. Whether you’re looking to apply for a new CEBA loan or refinance your existing loan, the government has introduced flexibility and extensions to make the repayment process easier. The latest CEBA update has increased the eligibility criteria and extended the repayment period, which can provide much-needed financial support for small businesses. If you’re a small business owner, we suggest you take advantage of CEBA and apply before the deadline expires. CEBA Loans are an excellent option as we all try to recover and move forward from the pandemic!