Surviving the Pandemic in Canada: CEBA Loans Explained for Businesses

Surviving the Pandemic in Canada: CEBA Loans Explained for Businesses

The pandemic of 2020 has many Canadians scrambling to keep their businesses afloat. Amid constant stopping and restarting of the economy, business owners have to find a way to remain flexible and profitable at the same time.

Enter CEBA loans. These government loans provide an alternative financing option that can save your business during this public health emergency.

Take a look at this guide to learn how CEBA loans work.

What is CEBA?

CEBA stands for Canadian Emergency Business Account. CEBA is a federally run program that provides $40,000 loans to small business owners and not for profit organizations who qualify.

The $55 billion program launched in April 2020 in response to the global coronavirus pandemic. It hoped to keep businesses afloat while the nation endured its unavoidable shutdown.

This loan program helps business owners continue to pay operating costs while experiencing temporary reductions in sales. The biggest perk of the CEBA loan is that it’s interest-free.

How Do I Repay a CEBA Loan?

Business owners who receive a CEBA loan are required to repay it in full before December 31, 2022. If you’re able to repay the loan before this date, you’ll receive loan forgiveness of 25 percent of your debt.

The maximum amount of loan forgiveness you can receive is $10,000.

Program Expansion Announcement

As of October 26, 2020, the CEBA program is adding more flexible qualifiers to include more business owners. You no longer need to meet the requirement of having an active business chequing account older than March 1, 2020.

Now eligible businesses can simply open a business account with their primary financial institution and request CEBA funding. You can request a CEBA loan from more than 220 financial institutions across Canada.

You can apply for a CEBA loan up until March 31, 2021. It’s been recently reported that CEBA loans are going up in value.

Borrowers will soon be able to request up to $60,000 in funds from the program. This new amount is available to existing borrowers and previous borrowers.

Do I Need a CEBA Loan?

CEBA loans benefit businesses directly impacted by the government shutdown. These loans are helpful in continuing your business’ financial obligations while you await the economy reopening.

Some businesses need help simply because their organization does not have a viable way of physical distancing resulting in a loss of sales. Be sure to have a plan in place to repay the funds well ahead of 2022.

You can qualify for a significant discount on your loan if you’re able to stay on track with payments.

Canadian Business Relief

The Canadian government is supporting its businesses with up to $60,000 soon through its expanded CEBA program. Even if you’ve already received funding through the program, you are eligible to apply again.

The deadline has been extended but funds aren’t unlimited. If you’re interested in applying, be sure to submit your application early to avoid missing out on much-needed support.

For more information and tips, visit our blog for updates.

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