Business Emergency Account – Updated October 22, 2020
Business emergency account
*The application deadline has been extended to December 31, 2020.
The federal government has announced the creation of an emergency account program. In collaboration with Export Development Canada (EDC), financial institutions will offer loans of up to $40,000 to small businesses and not-for-profit organizations. These loans will be interest-free until December 31, 2022.
Under the program, financial institutions have been offering loans of up to $40,000 to small businesses and non-profit organizations since April 9, 2020, in collaboration with Export Development Canada (EDC). These loans will be interest-free until December 31, 2022.
If the balance of the loan is repaid on or before December 31, 2022, an amount equal to 25% of the original principal amount will be written off, up to a maximum of $10,000. Small businesses and non-profit organizations will need to contact their financial institution to take advantage of this measure.
Before the relaxations announced on May 19, to qualify, companies had to show that they had paid between $20,000 and $1,500,000 in total payroll in 2019.
The program is now available to small businesses with a payroll of less than $20,000, provided they meet the following criteria:
- Have a business operating account at a participating financial institution;
- Have a Canada Revenue Agency business number
and
have filed an income tax return in 2018 or 2019;
Eligible non-deferrable expenses totalling between $40,000 and $1,500,000 incurred or planned between January1 and December 31, 2020 (eligible expenses would include rent, property taxes, service charges and insurance).
Repayment of the loan balance by December 31, 2022 will result in a write-off of 25% of the loan, up to a maximum of $10,000. Small businesses and non-profit organizations will need to contact their financial institution to take advantage of this measure. Once the application has been submitted, the financial institution will instruct you to submit supporting documents that are essential to the application.
On October 9, 2020, the government announced an expanded Canadian Business Emergency Account (CBEU) measure that will provide a new loan of up to $20,000 in addition to the original $40,000 loan. This additional loan would be granted to companies and non-profit organizations that are eligible for CUEC and are still severely affected by the pandemic. To demonstrate that the organization is seriously affected by the pandemic, a pandemic impact statement will be required to qualify for funding.
The deadline for applying to a financial institution for this new $20,000 loan is December 31, 2020. The loan will be interest-free until December 31, 2022. In addition, if the $20,000 loan is repaid before December 31, 2022, half of it will be written off, i.e. $10,000 under certain conditions.
In short, the extended CUEC is a loan of up to $60,000 interest-free, and if repaid before December 31, 2022, $20,000 will be written off.
Further details on this extended measure, including the effective date, are still to come.
