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Home  ->  Federal Budget ->  COVID-19 Financial Relief  ->   Canada Emergency Business Account (CEBA)

Canada Emergency Business Account (CEBA)

Deadline for applications: June 30, 2021.

Maximum loan amount:  $60,000, with $20k of $60k forgivable.

As of October 26, 2020: Eligible businesses operating through a personal bank account can apply for CEBA - but must open a business account first.  See news release.

Canada Emergency Business Account (CEBA) website

CEBA and Updates - new repayment deadline January 18, 2024 for ALL CEBA loans but some financial institutions recommend payment by January 15, 2024

Caution re Type of CEBA Loan

Timing of Inclusion in Income - Important!

CEBA Application Hotline

Conflicting Information on CEBA Documentation

CEBA Payroll Stream

CEBA Payroll Stream Eligibility Reversal October 2021

CEBA Non-Deferrable Expenses Stream

CEBA Pre-Screening Tool to assess eligibility - no longer available

Business Development Bank of Canada (BDC) Business Credit Availability Program (BCAP)

CEBA and Updates

CEBA was launched on April 9, 2020.  It provided interest-free bank loans, guaranteed by the government, of up to $60,000 to small businesses and to not-for-profits that are operating businesses.  If the balance of the loan is repaid on or before December 31, 2023, this will result in 25% (up to $10,000) of the $40,000 loan being forgiven, and 50% (up to $10,000) of the $20,000 loan expansion being forgiven.  The new deadline of 2023 was announced by the Department of Finance on January 12, 2022, and this will apply to all eligible borrowers in good standing.

CEBA Deadline Extension to January 18, 2024

On September 14, 2023 the deadline for repayment of the CEBA loan, in order to qualify for partial forgiveness, was extended to January 18, 2024 for eligible CEBA loan holders in good standing. The deadline is extended to March 28, 2024 if a refinancing application is submitted prior to January 18, 2024 at the financial institution that provided the CEBA loan. However, 5% per annum interest accrues starting on January 19, 2024, which must be paid by March 28, 2024, along with the principal, in order to qualify for the partial debt forgiveness.

See the CEBA Frequently Asked Questions for details and examples.

See the updated CEBA website for more information on the change in repayment deadlines (once the website has been updated).

See the October 2023 Life in the Tax Lane from Video Tax News.

Tax Tip: If possible, repay your CEBA loan by December 31, 2023 in order to avoid problems.

CEBA Loan Forgiveness Requirements Re Deadline Extension - Caveats:

 - If $60,000 was borrowed, no forgiveness is available unless $40,000 (total owing from both loans) is repaid.

 - If refinancing application is submitted prior to January 18, 2024, 5% per annum interest accrues starting on January 19, 2024, which must be paid by March 28, 2024, along with the principal, in order to qualify for the partial debt forgiveness

 - Loan holders will be contacted in the coming months by their financial institution to confirm their eligibility for the January 18, 2024 repayment deadline to qualify for partial loan forgiveness.

Many businesses have already been told they were not eligible for a CEBA loan, even though it had been granted based on information they provided in the application.  These businesses will not have any portion of the loan forgiven, but they will still have until Dec 31, 2023 (now January 18, 2024) to pay back the loan.

See the Canadian Federation of Independent Business (CFIB) information CEBA loans: repayment extension for some, notices of ineligibility for others.

See also Thousands of Businesses Told They Were Ineligible For CEBA Loans by Derek Montague of Huddle.

Loss of CEBA Loan Forgiveness

The forgivable portion of a CEBA loan is taxable when funds are received (ITA s. 12(1)(x)), but if and when repaid, are deductible when repaid (ITA s. 20(1)(hh)).  This is confirmed by Canada Revenue Agency (CRA) in Technical Interpretation 2020-0861461E5 Tax Treatment of Loan Forgiveness under CEBA.

CEBA Increase to $60,000

As of December 4, 2020, CEBA loans increased from $40,000 to $60,000, with $20,000 forgivable.  Businesses who had received the $40,000 loan were able to apply for the $20,000 expansion.

For details on the attestation that was required by borrowers, see the Video Tax News article Expanded CEBA program (20,000) now open.

Important:  If you're considering applying for the additional $20,000 CEBA loan, be aware that it can change the requirements for the original $40,000 loan.  If your attestation for the $40,000 said you could use the funds for "without limitation, payroll" etc., that will be changed to use for only Eligible Non-Deferrable Expenses, which includes only non-arm's length payroll (i.e., not owners' wages).  See the Crowe Soberman article CEBA Expansion - Think Twice Before Applying for the Additional $20,000.

Applications were online only, through your financial institution, and could be accessed by telephone or at your branch.  Applications closed June 30, 2021.

CEBA Term Loan information for the big 6 Canadian banks

 - TD Canada Trust

 - Royal Bank


 - Bank of Montreal

 - Scotiabank

 - National Bank

Applications would be accepted until March 31, 2021, according to the 2020 Federal Fall Economic Statement.

The September 23, 2020 Throne Speech announced that CEBA would be expanded.  An October 9, 2020 press release provided more detail:

 - expanded to enable businesses and not-for-profits eligible for CEBA loans, that continue to be seriously impacted by the pandemic, to access an interest-free loan of up to $20,000, in addition to the original CEBA loan of $40,000.

 - half of the additional financing is forgivable if repaid by December 31, 2022.

 - application deadline for CEBA extended to December 31, 2020.

 - attestation of the impact of COVID-19 on the business will be required to access the additional funding.

 - more information to come in the coming days.

October 26, 2020 news release: CEBA now open to businesses using personal bank accounts.

Caution re Type of CEBA Loan

If your bank has set up your CEBA loan so that it is a line of credit, it's very important for you to transfer the funds from the line of credit to your operating account, because the forgivable 25% is based on the maximum balance of the loan up to December 31, 2020, at least for the $40,000 loan.  See Beware of CEBA accounts set up as LOC's - you might not get the $10,000 loan forgiveness you were expecting.  Apparently RBC has set up the CEBA loan like a Visa, which would have the same result.

See the Video Tax News information on CEBA updates which address the RBC loan agreement as well as CEBA uncertainties.

Timing of Inclusion in Income

The forgivable portion of the CEBA loan is taxable when received (confirmed by CRA) - see Tax Treatment and Accounting Treatment of Forgivable Loans such as CEBA and CECRA.

CEBA Application Hotline

Although all applications and approvals are handled by financial institutions, Export Development Canada has set up a CEBA call centre which may help you with any problems you're having with the status of your application.  The number is 1-888-324-4201.  The centre is open Monday to Friday from 8 am to 9 pm EST and will address the following types of questions:

 - What is the status of my application

 - Why was my application declined?

 - Why was my submitted document rejected?

However, our call regarding a couple of general issues not related to a particular application were not answered other than to say  that the criteria on the CEBA website are the correct criteria, not necessarily the documentation provided by the financial institution.

The CEBA Frequently Asked Questions (FAQ) have a list of the types of documents that are considered invalid as proof of 2020 Eligible Non-Deferrable Expenses.  Documentation is required for applications under the non-deferrable expenses stream.

Conflicting Information on CEBA Documentation

Some documentation provided under the payroll stream indicates that "The Borrower is a business that is a sole proprietorship, partnership or a Canadian-controlled private corporation ("CCPC") that was in operation in Canada on March 1, 2020."  This would exclude not-for-profit corporations, although the CEBA FAQ indicates that non-profit organizations, registered charities, unions, etc are excluded unless they are actively carrying on a business in Canada that earns revenue from the regular supply of property/goods or services.  It would also exclude cooperative corporations, which are not excluded according to the CEBA FAQ.

Other documentation under the payroll stream indicates that "The Borrower was a Canadian operating business in operation as of March 1, 2020."  This agrees with the CEBA FAQ.

See Payroll Stream below for conflicting information on payroll to non-arm's length parties.

See the Video Tax News information on CEBA updates which address some CEBA uncertainties.

CEBA Payroll Stream

The Payroll Stream applications are available through your bank, for businesses with payroll of $20,000 to $1,500,000. 

CEBA funds can be used to pay non-deferrable operating expenses including payroll.

Can payroll be to non-arm's length parties?  It depends on which documentation you look at.  Some documentation for payroll stream applications says "without limitation, payroll, ..." and other documentation says "wages and other employment expenses to independent (arm's length) third parties".  The CEBA FAQ at first did not say that payroll was limited to arm's length third parties.  It changed at some point (perhaps when the non-deferrable expenses stream started?), to say that eligible non-deferrable expenses did not include non-arm's length expenses.  We've tried accessing previous versions of the website using the Wayback Machine, but it seems unable to access the previous CEBA website versions.

Non-deferrable expenses also include rent, utilities, insurance, property tax and regularly scheduled debt service.  The funds cannot be used to fund prepayment/refinancing of existing debt, payments of dividends, distributions and increases in management compensation.

CEBA Payroll Stream Eligibility Reversal October 2021

It's been reported that some CEBA applicants have received notifications from their financial institutions that they are now not eligible for the loans they were approved for and received a long time ago.  A reason is not necessarily given, but it appears that if the payroll was $20,000 and not $20,000.01 or more, CRA is deeming the applicant to be ineligible.  There is no appeal process.

Anna Malazhavaya, Advotax Law tax lawyer, and Joseph Devaney, CPA, CA of Video Tax News, are trying to get an idea of how big this issue is, and trying to sort out what is going on.  If you're a tax preparer who has clients who are affected, go to Anna's LinkedIn post on this, or to the Facebook Canadian Tax Nerds group where there is are posts on this by Anna, who has been contacted by CBC on this.  Search the group for "CEBA" to find the posts from Oct 8 and Sep 30 2021.

Non-Deferrable Expenses Stream - Opened June 26, 2020

On May 19, 2020 the government announced the expansion of the CEBA program to include sole proprietors, businesses that rely on contractors, and family-owned corporations that pay employees through dividends rather than payroll.

As with the CEBA payroll stream, this application is done online through your financial institution and cannot be accessed by telephone or your branch.

To qualify, applicants with payroll lower than $20,000 (Non-Deferrable Expenses Stream) per year would need:

 - a business operating account at a participating financial institution,

 - a CRA business number, and to have filed a 2018 or 2019 tax return, and

 - eligible non-deferrable expenses between $40,000 and $1.5 million in the 2020 calendar year.  This could include costs such as rent, property taxes, utilities and insurance.

The CEBA FAQ were updated on June 15th regarding applications under the expanded program, with further requirements for applications under the "Non-Deferrable Expenses Stream", including the submission of supporting documentation for 2020 eligible non-deferrable expenses.  The process for this type of applications was available starting June 26th.  The application process will take longer than the process for those done under the "Payroll Stream".  Funding will be received within 10-15 business days for approved applicants.

Video Tax News Additional CEBA FAQ information released.

Update June 30, 2020: CEBA FAQ now has information on exactly which non-deferrable expenses are eligible for the non-deferrable expenses stream, and what documentation must be provided to support these expenses.  See the Video Tax News article CEBA FAQ on document upload relased, which also links to the CEBA Upload Guide.

The May 19th press release also said that "the government will work 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".  As of October 26, 2020, this can now be done.

Revised: January 05, 2024


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