COVID-19 Updates - Expansion of the Canada Emergency Benefit Account
Dear Valued Clients,
Today, our Prime Minister announced the expansion to the eligibility criteria for the Canada Emergency Business Account (CEBA). This program has been expanded to include many more owner-operated small businesses to help them with operating costs while dealing with their reduced revenues as a result of the pandemic.
Expanded Eligibility Criteria
The program will now include the following:
- businesses that are sole proprietors receiving income directly from their
- businesses; businesses that rely on contractors; and
- family-owned corporations that pay employees through dividends rather than payroll.
To qualify under the expanded eligibility criteria, applicants with payroll lower than $20,000 would need:
- a business operating account at a participating financial institution;
- a Canada Revenue Agency business number, and to have filed a 2018 or 2019 tax return; and
- eligible non-deferrable expenses between $40,000 and $1.5 million. Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance.
The Canadian government is working on potential solutions to help business owners and entrepreneurs who operate through their personal bank account, as opposed to a business account, or have yet to file a tax return, such as newly created businesses.
Expenses will be subject to verification and audit by the Government of Canada. Funding will be delivered in partnership with financial institutions. More details, including the launch date for applications under the new criteria, will follow in the days to come.
CEBA Loan Funds
The funds from this loan shall only be used by the Borrower to pay non-deferrable operating expenses of the Borrower including, without limitation, payroll, rent, utilities, insurance, property tax and regularly scheduled debt service, and may not be used to fund any payments or expenses such as prepayment/refinancing of existing indebtedness, payments of dividends, distributions and increases in management compensation. Qualifying business who repay the balance of the loan on or before December 31, 2022 will received a loan forgiveness of 25 percent (up to $10,000).
To apply for CEBA loans, small businesses and not-for-profits should contact their financial institution directly. Please visit this website to see if your financial institution is one of the 232 financial institutions participating in the CEBA program: https://ceba-cuec.ca/
This newsletter and the details provided are solely shared for informational purposes and does not constitute legal, tax, or financial advice or opinions. Please do not hesitate to contact your manager for assistance.
Pramen Prasad CPA, CA, CMA Managing Partner
Prasad & Company LLP
If you have any questions, you can reach us at:
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