CEBA – Canada Emergency Business Account Update

COVID-19 – Canadian Tax and Business News, release #15

Our COVID-19 Canadian Tax and Business News updates are our way of informing our clients, friends and business associates with recent information that may help businesses and individuals while coping with the outcomes from the COVID-19 pandemic.  

Our goal is to monitor the news and release relevant information as it becomes available.

“Thousands of candles can be lighted from a single candle, and the life of the candle will not be shortened. Happiness never decreases by being shared.”


– Buddha


The summary below is based on our understanding and interpretation of the announcements made by the government. The information below is in summary form and subject to change until the proposals are passed as legislation. Contact one of our professionals to discuss these matters in the context of your situation before acting upon such information.


Update on June 19th:

Minister Morneau announced via Twitter that the expanded CEBA program will no longer launch on June 19, 2020. The government will announce the revised launch date when details are available. 

“The expanded #CEBA will no longer launch tomorrow. Work continues around the clock to ensure the program can securely launch across over 230 financial institutions. We know how important the program is to small businesses & want to launch as quickly as possible. Updates to come.” Bill Morneau via Twitter on June 18, 2020


Canada Emergency Business Account (CEBA)

The CEBA provides small businesses access to $40,000 of interest-free loans to help cover their operating costs due to the economic impacts of COVID-19. $10,000 of the total loan will be forgiven if repaid by December 31, 2022.

The program initially was available to eligible businesses with payroll between $20,000 and $1.5 million in 2019. However, on May 19, 2020, the government announced the expansion of the CEBA program to sole-proprietors and businesses that remunerate via dividends rather than payroll.

On June 15, 2020, the CEBA FAQ webpage was updated with additional details on the expanded program including specifics on eligibility. Applications under the expanded program will be available starting June 19, 2020.



To qualify under the general stream, a business must have payroll between $20,000 and $1.5 million in calendar year 2019.

To qualify under alternative stream where payroll is $20,000 or less in calendar year 2019, the borrower must have:

  • A CRA business number and has filed a 2018 or 2019 tax return
  • Eligible non-deferrable expenses between $40,000 and $1.5 million which could include payroll, rent, property taxes, utilities, and insurance

Both streams also require:

  • The business intends on continuing or resuming operations
  • The business has not previously used the program or applied with another financial institution
  • An active business chequing/operating account with is its primary financial institution that was opened on or prior to March 1, 2020. Businesses, particularly sole proprietors, who use a personal bank account to do their business banking are not eligible for CEBA
  • If applicable, the account with the lender is not in arrears on existing borrowing facilities by 90 days or more as at March 1, 2020
  • The business agrees to post-funding surveys conducted by the government



The funds received from CEBA must be used to pay non-deferrable operating expenses which include payroll, rent, utilities, insurance, property tax and regularly scheduled debt service, and may not be used to fund any payments or expenses such as prepayment/refinancing of existing indebtedness, payments of dividends, distributions and increases in management compensation.


How to Apply

General Stream – Payroll

CEBA applications under this stream are completed directly through the financial institution where the business holds its primary business account. Once the application has been approved, financial institutions will provide funds directly to the businesses operating account.

Alternative Stream – Non-Deferrable Expenses

Applications under this stream will follow a two-step process:

  1. The business will have to apply directly with their financial institution
  2. After applying with the financial institution, businesses will be directed by their financial institution to a CEBA website where they can upload documentation to support the non-deferrable expenses. Businesses will be required to upload receipts, invoices or agreements as evidence of the 2020 non-deferrable expenses.

When determining the non-deferrable expenses, certain expenses may need to be adjusted for other COVID support received. For instance, payroll must be reduced by any amounts received under the Canada Emergency Wage Subsidy and Temporary Wage Subsidy programs. Furthermore, rent must also be adjusted for amounts received under the Canada Emergency Commercial Rent Assistance program or the Regional Relief and Recovery Fund.

The government will review the applications and supporting documents submitted and if approved, they will notify the financial institution to release the CEBA funds. Funding should be received within 10-15 business days once businesses have applied, uploaded all supporting documents and have successfully passed pre-funding eligibility validation. All declined applicants will be notified directly by their financial institution along with a reason for the decline.