- May 5, 2020
Canada Emergency Business Account.
Recently the Government of Canada announced that. it will provide through Canada Emergency Business Account financial support to small businesses that affected by the COVID-19. In order to cover small businesses’ short-term financial obligations such as paying for their operating expenses, rent, utilities and any other non deferrable expenses. The Government of Canada is providing $40,000 interest free loan to these small businesses.
The eligible business will receive $40,000 loan to cover their operating expenses. Operating expenses such as rent, payroll, utilities and other non-deferable expenses that are critical to sustain the business.
This $40,000 loan are guaranteed by the government carrying no interest, In other words, it is interest free until December 31st, 2022.
Portion of the loan say 25% or $10,000 is forgivable if the loan is repaid before December 31st, 2022. Otherwise, it will be converted to a three-year term loan carrying an interest of 5%.
To qualify for this interest free loan, your business must be in existence prior to March 1st, 2020. And also, your 2019 total payroll paid to employees have to be more than $50,000 and lesser than $1,000,000. This amount can be found in your T4 Summary. Also, assuming that you’ve never applied for this program before.
How do you apply? You have to apply this through the online banking through your bank. If you don’t have the online banking setup, you have to go the branch of your bank, and talk to your banker and make sure that they set up your online access. Because the application must be filled online.
The process of applying for this loan is pretty simply. You need your T4 Summary of 2019 as well as your business number. The 15-digit business number with the RP0001 and so on.
Let me show you and walk you through the application process.
After you signed in to your online banking. You may see a link to the form. Click on it, you will see the Canada Emergency Business Account. When you’re on this form, move down line four. You will need to fill in a few pieces of information here. First is the business number. Just type in your business number, and then the total income reported in your T4 Summary of last year. That should be more than $50,000. Then you scroll down to the very bottom. Make sure you read all this. Make a check and type in your company name, your phone number, an email. And of course, the bank account number and branch number. Keep filling out the necessary information. I believe that when you are logged in, because the bank has your information, it will automatically populate the information that they have in their record. Then you don’t have to fill in every single field here. So, after that just check on the boxes here and hit the submit button. And you are done.
As of today, we still don’t have any update from the government about the EDC working capital loan of up to $6.25 million for the small and medium sized businesses. But we do have the co-lending program information here.
The BDC co-lending program for small and medium sized business. If you qualified, you will be able to borrow up to $6.25 million dollars. How does this loan works? If your revenue is less than $1 million, you can borrow up to $312,500. And if your revenue is between $1 million and $50 million you could borrow up to $3.125 million. And if its more that $50 million in revenue, then you may be qualified to borrow up to the maximum of $6.25 million dollars.
The first 12 months of the loan, you only have to pay interest. You don’t have to pay the principal. You have 10 years repayment periods to pay off this loan. Further detail will be available through your bank. Your have to talk to your banker about the detail of this co-lending program of BDC and the bank.
There are some other financial supports available through your bank. Business Banking Principal Payment Deferral may be available through your bank to support small businesses that affected by coffee 19. What does this program do? You may apply to your bank to defer the loan payments. The existing loan that you have through your bank to defer up to four months, if your loan is an unsecured loan. If the loan is secured by real estate, for example, you may request to deferred loan payment for up to six loans.
Please note that although you don’t have to make a payment, your interest will still be accrued. In other words, you’ll be paying more interest than you originally planned.
Depending on how the situation develops. The Government of Canada may increase the supports to the businesses.
We will continue to update when information is available. So if you have any questions please feel free to contact us via the social medias. If you like what you see so far, please subscribe or follow us in the social medias. Thank you.
