Available in early-April, the Canada Emergency Business Account will provide qualifying businesses with access to a $40,000 loan that:
- is non-interest bearing until Dec 31, 2022;
- requires no minimum monthly principal payments until December 31, 2022;
- allows for principal repayments to be made at any time;
- provides for $10,000 loan forgiveness provided the outstanding balance is fully paid on or before December 31, 2022; and
- will convert into an interest-bearing term loan on Dec 31, 2022 of the unpaid principal balance.
Additional eligibility criteria (as communicated by a few of the Canadian banks who have released information) are:
- The person applying has the ability and authority to bind the organization.
- Your organization is an operating business (i.e., not a holding company) in operation on March 1, 2020.
- Your organization’s payroll expense in the 2019 calendar year was between $50,000 and $1 Million. You will need to provide:
- Your employer account number, as reported at the top of the 2019 T4 Summary
- Your employment income reported in Box 14 of their 2019 T4
- Your 2019 T4SUM when requested upon audit
- As per the requirements of the program set out by the Government of Canada, you will agree to use funds from this loan to pay for operating costs that cannot be deferred, such as payroll, rent, utilities, insurance, and property tax.
- Banks may also stipulate that you have had an active business operating account with them as at a certain date.
In order to access this loan, you must apply directly through your primary financial institution. You cannot apply for this program at multiple financial institutions without risking federal prosecution.
There is currently no guidance or exceptions noted for companies that only pay dividends or subcontractor payments and do not meet the above payroll requirement. We will continue to update this for planning options and exceptions as they become available.
As your trusted advisors, we will update you as soon as we have more information.
If you have any questions, please contact your HGA Advisor or info@hgacpa.com.
