CEBA Loan Eligibility and Application 

The Canada Emergency Business Account (CEBA) loan is a financial aid initiative by the Canadian government, offering interest-free loans of up to $60,000 to small businesses. A significant portion of this loan, 33%, is forgivable under certain conditions. The forgivable part includes 25% of the initial $40,000 loan and 50% of the additional $20,000 loan, provided the non-forgivable part is fully repaid by December 31, 2022. 

Eligibility Criteria for CEBA Loan 

Businesses can qualify for the CEBA loan through two different streams: 

• Payroll Stream: Businesses with a payroll between $20,000 and $1,500,000 in the 2019 calendar year are eligible. 
• Non-Deferrable Expenses Stream: Businesses with eligible non-deferrable expenses ranging from $40,000 to $1,500,000 can apply. These expenses include costs such as rent, property taxes, utilities, and insurance. Applicants must have filed an income tax return for the 2019 year or, if not due yet, for the 2018 year. It’s important to note that receiving benefits from other government relief programs may reduce the eligible expenses for the CEBA loan. The government will verify and audit these expenses. 

The deadline for applying for the CEBA loan was March 31, 2021, and applicants must have had a business number registered on or before March 31, 2020, along with a business chequing account. 

Application Process 

• Payroll Stream: Applicants should contact their financial institutions to initiate the application process. The government assesses the application and informs the institution about the approval or decline. 
• Non-Deferrable Expense Stream: Applicants must first use an online pre-screen tool. If successful, they should then contact their financial institution to start the CEBA loan process and provide documentation for their non-deferrable expenses on the CEBA website. 

Tax Implications 

The Canada Revenue Agency (CRA) assumes repayment of the non-forgivable portion of the loan before the deadline. The forgivable part is treated as a government grant and included in taxable income in the year the loan is received. If the loan isn’t repaid by December 31, 2022, this forgivable portion previously included in income will be deducted from taxable income. The loan then converts into a 5-year term loan with a 5% annual interest rate, starting January 1, 2023, and must be fully repaid by December 31, 2025.