{"id":9169,"date":"2020-04-13T19:00:25","date_gmt":"2020-04-13T23:00:25","guid":{"rendered":"http:\/\/www.irasmithinc.com\/blog\/?p=9169"},"modified":"2020-05-24T15:22:05","modified_gmt":"2020-05-24T19:22:05","slug":"covid-19-business-support-canada-emergency-business-account","status":"publish","type":"post","link":"https:\/\/irasmithinc.com\/blog\/covid-19-business-support-canada-emergency-business-account\/","title":{"rendered":"COVID 19 BUSINESS SUPPORT: CANADA EMERGENCY BUSINESS ACCOUNT REVIEW"},"content":{"rendered":"

\"covid<\/a><\/b><\/span><\/p>\n

If you would prefer to listen to the audio version of this Brandon’s Blog, please scroll to the bottom and click play on the podcast<\/strong><\/p>\n

The Ira Smith Team is totally operational and both Ira and Brandon Smith are here for a telephone consultation, conference calls and virtual meetings.\u00a0<\/b><\/span><\/p>\n

Keep healthy and safe everybody.<\/b><\/span><\/p>\n

Introduction<\/b><\/span><\/h2>\n

The full information about the <\/span>Canada emergency business account (CEBA) is now revealed. The Canada emergency business account application form, full details and the online-only application procedure appeared on April 9, 2020. Prime Minister Trudeau announced that this new program as part of the federal government’s overall program to provide COVID 19 business support<\/strong>.\u00a0 This program will see financial institutions supplying $40,000 in a loan guaranteed by the federal government.\u00a0 The loans are being processed and administered by the Canadian banks. The CEBA is really not a business account. It is a government-guaranteed loan of $40,000 that is interest-free till December 31, 2022.<\/span><\/p>\n

In <\/span>Brandon’s Blog<\/span><\/a>, I will describe who qualifies for a CEBA and how it works.\u00a0 I will also point out some issues, which from what I can tell, have not yet been reported in the media.<\/span><\/p>\n

The <\/span>Ira Smith Team<\/span><\/a> family hopes you and your loved ones are staying secure, healthy and balanced. We pray for every person that has been affected either through inconvenience or tragedy.<\/span><\/p>\n

If you need our assistance, rest assured that Ira or Brandon can still assist you. We, of course, are not meeting anyone face to face.\u00a0 Telephone consultations and\/or online meetings are available for anybody who has any questions or concerns they wish to discuss, either in a personal or business scenario.<\/span><\/p>\n

The Canada emergency business account program<\/b><\/span><\/h2>\n

The CEBA has actually been specifically created by the Canadian government<\/a> to provide <\/span>COVID 19 business support<\/span><\/a> to small and medium enterprises (SMEs) and non-profit organizations (NPOs) with their most immediate cash requirements during the COVID-19 crisis. The federal government will provide as much as $25 Billion to finance the CEBA program. The CEBA is a federal government assured funding to each qualified business of $40,000 that is interest-free up until December 31, 2022.<\/span><\/p>\n

Loans under the CEBA will be interest-free for the first year and a half.\u00a0 As well, 25% of the loan, or $10,000, will be forgiven if the other 75% is repaid by the end of 2022.<\/span><\/p>\n

“Don’t worry ’bout a thing, cause every little thing’s gonna be alright.” – <\/strong>Bob Marley<\/strong><\/p>\n

Canada emergency business account requirements<\/b><\/span><\/h2>\n

So who qualifies for the $40K CEBA?\u00a0 The requirements in order to qualify for a CEBA are not hard to meet.\u00a0 The CEBA is only available to incorporated companies and NPOs who have a registered federal business number that was operational on or before March 1, 2020.\u00a0 The CEBA is open to SMEs and NPOs with a total 2019 payroll between $50,000 and $1 million.\u00a0<\/span><\/p>\n

The CEBA COVID-19 business support plan is made to supply much-needed relief for Canadian SMEs and NPOs.\u00a0 It helps them to take care of and sustain them through this <\/span>tough time<\/span><\/a>. The CEBA is not available to proprietorships or partnerships. Therefore it is not available to the self-employed who did not set up their business through a corporation.<\/span><\/p>\n

On the one hand, this might exclude an important group of businesses in Canada.\u00a0 On the other hand, when you think about it further, it makes sense. Given the extent of the underground economy in Canada, I doubt there are any unincorporated businesses in Canada with employees that in 2019 have run a <\/span>payroll account<\/span><\/a>, taken deductions and remitted them to Canada Revenue Agency.\u00a0 More than likely any unincorporated business in Canada that does have employees operates on a cash basis!<\/span><\/p>\n

COVID 19 business support through small business relief<\/b><\/span><\/h2>\n

I have seen the CEBA described in the press as a federal program that will provide a $40,000 line of credit to qualified businesses at 0% interest until Dec. 2022.\u00a0 The CEBA is actually a one-time loan. It is not a revolving line of credit. What that means is that if approved, the SME or NPO gets the COVID 19 business support and receives the full $40,000 loan in one tranche upon approval.\u00a0 It then gets repaid according to its terms (further discussed below).\u00a0\u00a0<\/span><\/p>\n

A traditional line of credit lets you borrow what you need up to your authorized amount.\u00a0 Then, when you deposit money into the account associated with the line of credit, the line automatically goes down by that amount.\u00a0 That then gives more borrowing room equal to the amount of your deposit. The CEBA does not work that way. It is a term loan, with specific repayment and default provisions.\u00a0 Once you make a partial payment against the loan, you cannot borrow against it further.<\/span><\/p>\n

“Keep calm and carry on,” – British government WWII posters<\/strong><\/p>\n

The Canada emergency business account how to apply<\/b><\/span><\/h2>\n

The CEBA application process for <\/span>COVID-19 business support<\/span><\/a> is done all online.\u00a0 You apply through your bank where your corporation or non-profit keeps a business account.\u00a0 The application process is very simple. The best way is to show you.<\/span><\/p>\n

So this is the application for the CEBA form.\u00a0 As you can see there are just a few steps you have to do to apply.\u00a0 You have to attest that:<\/span><\/p>\n