The CEBA Loan Application Deadline is Quickly Approaching: June 30, 2021
18 Jun 2021
On March 31, 2021, the deadline for applying for the Canada Emergency Business Account ("CEBA") was extended to June 30, 2021.
What is the expanded CEBA Program?
The expanded CEBA Program provides interest-free loans of up to $60,000 (or an additional $20,000 if you already received $40,000) to small businesses and not-for profits. If the loan is repaid on or before December 31, 2022, 33% of the loan is forgiven, or up to $20,000.
Who is eligible?
If you are operating an active business as a sole proprietor, a partnership, or a Canadian-controlled private corporation ("CCPC"), that was operating on or before March 1, 2020, you may be eligible to apply. The program requires specific criteria to be met in order to be eligible for the loan, such as having an active CRA business number on or before March 1, 2020, and the applicant must fall into either of two streams:
i. Payroll Stream: Applicants with total employment income paid in the 2019 calendar year of more than $20,000 but less than $1,500,000.
ii. Non-Deferrable Expense Stream: Applicants with $20,000 or less in total employment income paid in the 2019 calendar year must meet the following criteria:
- Applicants must have eligible non-deferrable expenses between $40,000 and $1,500,000. These expenses may include rent, property taxes, utilities, and insurance.
- Applicants have filed an income tax return with the CRA for a tax-year ending in 2019, and if 2019 has not been submitted, a return for the 2018 tax year must have been filed.
If you originally applied and received the $40,000 loan and met the eligibility criteria, your loan can be increased by an additional $20,000. The application for either the full $60,000, or the $20,000 top-up, can be made through your primary financial institution on or before June 30, 2021.
Other important information to be mindful of:
Keep in mind that the application supporting documentation may be requested to be provided prior to receiving the funds. In addition, the forgivable portion of the loan (which is up to $20,000) is included in income in the year the loan was received and thus must be reported on your income tax return. However, an election can be made to reduce the amount of respective expense instead of reporting this as income. The election must be filed with the income tax return for the tax year in which the expense was incurred.
As the eligibility criteria for the CEBA program and the rules surrounding the income inclusion of the forgivable amount can be complex, please contact SBLR LLP for assistance.