Did you or your clients qualify for the $40,000 Canada Emergency Business Account (CEBA) loan? If so, another $20,000 loan is available and up to half of this is forgivable if repaid by December 31, 2022. But the deadline for applying is this month on March 31, 2021. Here’s what you need to know.
First, the penalties for submitting inaccurate information are very steep, resulting in criminal charges of up to 14 years in prison, plus fines and repayment of the loan. Applicants need to follow the rules of eligibility and spend the money properly.
For example, the business must show that it is suffering ongoing financial hardship because of the pandemic. This can include a decline in revenues or cash reserves, or an increase in operating costs for example. The business must also show that it intends to continue to operate or resume operations, and that it has made all reasonable efforts to reduce costs or adapt the business to improve viability.
The money must be used for Eligible non-deferrable expenses that are incurred and not deferrable after 2020:
Here’s what the money can’t be used for:
June 30, 2021 is the last day to withdraw or transfer funds from the CEBA loan. Until that day, the loan is considered to be revolving line of credit. After this date, this becomes a non-revolving term loan.
Additional educational resources: Interested in learning more about the pandemic relief options and their impact upon individuals and businesses? Take the Advanced Tax Update & Pandemic Course