Are you still considering applying for the CEBA loan?
You have until June 30, 2021 to apply for the $60,000 CEBA loan or the $20,000 expansion from the original $40,000 CEBA loan
The first consideration is an attestation that:
- Your business is facing ongoing financial hardship as a result of the COVID-19 pandemic
- Your business intends to continue to operate or resume operations
- In response to the COVID-19 pandemic, your business has made all reasonable efforts to reduce its costs or adapt its business to improve its viability
- Your business has not used any amount received previously under the CEBA loan program to make any payment or pay any expenses other than ‘eligible non-deferrable expenses’
What can I use the CEBA loan for and what can I not use the CEBA loan for?
- In the initial CEBA loan (the $40,000 loan), there was a clause that stated that ‘funds from this loan shall only be used by you to pay your non-deferrable operating expenses including, without limitation, 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.
- When changes and extensions to the CEBA loan were launched in October (the $20,000 extension or $60,000 loan), there are more defined restrictions on allowable non-deferrable operating expenses. They are limited to:
○ Wages and other employment expenses to independent (arm’s length) third parties
○ Rent or lease payments for real estate used for business purposes
○ Rent or lease payments for capital equipment used for business purposes
○ Payment incurred for insurance related costs
○ Payments incurred for property taxes
○ Payments incurred for business purposes for telephone and utilities in the form of gas, oil, electricity, water, and internet
○ Payments for regularly scheduled debt service
○ Payment incurred under agreements with independent contractors and fees required in order to maintain licenses, authorizations or permissions necessary to conduct your business
○ Payment incurred for materials consumed to produce a product ordinarily for sale by you
○ Any other expense in a category other than the above as may be indicated by the Government of Canada on https://application-demande.ceba-cuec.ca/ from time to time
○ The list of things that the loan cannot be used for remained the same as with the original loan
Even with the more stringent attestation rules and more precise list of allowable non-deferrable operation expenses, if you believe you qualify and are interested in applying for the $60,000 CEBA loan or the $20,000 expansion from the original CEBA loan, please contact your Stark & Marsh advisor for more details.
We would like to help. Contact Stark & Marsh today to discuss your personal circumstances.