The federal government has announced further updates on how the Canada Emergency Business Account (CEBA) will work, including the option for businesses to open a business account in order to qualify.
Announced at the beginning of the COVID-19 pandemic economic shutdown, CEBA is an interest-free $40,000 operating loan. If you repay 75 percent of the total amount ($30,000) by December 31, 2022, the remaining 25 percent ($10,000) is eligible for a loan forgiveness benefit, but the $10,000 is taxable for the year it’s received.
The original stipulations of the loan included a payroll minimum of $20,000 to qualify and existing ownership of a business account at a financial institution. Many small businesses, farmers included, did not meet the payroll criteria, and the first round of updates to the loan including a move to include eligible, non-deferrable expenses in order to qualify vs. payroll.
However, there were still more small business and farms that did not have an existing business account as of March 1, 2020, and therefore did not qualify.
This latest change will mean that those who want to apply can open a business account even now in order to satisfy this requirement.
Marie-Claude Bibeau, Minister of Agriculture and Agri-Food, says regarding the expanded criteria, “This has been an important ask from farmers and will help ensure the financial strength of the thousands of small agricultural businesses across the country… We strongly encourage farmers and food businesses who have been impacted by the COVID-19 pandemic to take advantage of the generous terms offered by the CEBA loans.”
Regardless of the administrative challenges, now cleared, farmers will still have to show $40,000 in eligible non-deferrable expenses to qualify for the operating loan, and will have to sign an attestation that COVID-19 has negatively impacted their business.
The extended deadline to apply for CEBA is December 31, 2020