CEBA - Should I or Shouldn't I?

Short answer is yes! If you qualify. Doctors have been impacted much like many other businesses.

One of the early COVID supports offered by the Feds was the Canada Emergency Bank Account (CEBA). The original plan was that they would provide a $40,000 line of credit / loan to businesses to support them to cover non-deferrable expenses (think: Wages, rent, regular required payments). If the $40,000 was paid back to the bank by December 31, 2022 - 25% would be forgiven, meaning you would get $10,000 and only have to pay back $30,000. Also, the loan up to December 31, 2022 would be at 0% interest. If you still need the money, the loan would be converted in to a term loan with the bank and nothing will be forgiven.

So this sounds attractive correct? You are right! As long as you qualify. To qualify there are multiple routes. The easiest route is the “Payroll Stream”. To qualify for the payroll stream you must:

  • Have an active CRA Business Number (BN) with an effective date of registration on or prior to March 1, 2020. (Note that if you are a sole proprietorship you may qualify if you have a payroll account).

  • Have an active business chequing/operating account with the Lender (ie. RBC) at the time of applying for CEBA. Note: If Borrower currently does not have a business chequing/operating account the Borrower must create one at their primary financial institution before applying for CEBA.

  • Have not previously used the Canada Emergency Business Account Program (the “Program”) and will not apply for support under the Program at any other financial institution.

  • Intends to continue to operate its business or to resume operations.

If you do not qualify for the above then you are in the more difficult (and time consuming to apply) program of the non-deferrable expense route. For this you must…

  • Have eligible non-deferrable expenses between Cdn. $40,000 and Cdn. $1,500,000. Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance. Expenses will be subject to verification and audit by the Government of Canada.

  • Filed an income tax return with the CRA with a tax year ending in 2019 or, if its tax return for 2019 has not yet been submitted, 2018.

Now you may have heard that the CEBA program has Expanded - yes, this is true but the terms are a bit stricter as it requires an attestation of the impact of COVID-19 on the business will be required to access the additional financing. (https://www.canada.ca/en/department-finance/news/2020/10/government-announces-new-targeted-support-to-help-businesses-through-pandemic.html)

If you qualify for any of these programs though make sure you apply soon - December 31, 2020 is the application deadline!!

To read the official CRA publication on CEBA go here: https://ceba-cuec.ca

Michael SadovnickCEBA, COVID, Loan, Doctor