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Federal government expands criteria for emergency business loans

- Reuters

OTTAWA — The federal government has expanded the Canada Emergency Business Account (CEBA) so more businesses are eligible.

The CEBA offers $40,000 loans through financial institutions backstopped by the government to businesses suffering as a result of the COVID-19 pandemic. The loans are 25 per cent forgivable if paid back by 2022, and previously were only available to businesses that paid between $50,000 and $1 million in salaries in 2019.

On Thursday, Prime Minister Justin Trudeau announced businesses that spent between $20,000 and $1.5 million in total payroll in 2019 will be eligible to receive a loan through the CEBA.

“This is money entrepreneurs and employers can use to cover operational costs and help with other immediate needs,” Trudeau said.

According to the federal government, to date, more than 195,000 loans have been approved, which amounts to more than $7.5 billion in credit to small and medium-sized businesses.

Rent assistance

Also on Thursday, the federal government announced the Canada Emergency Commercial Rent Assistance program for small business.

At a news conference, Finance Minister Bill Morneau said the program will provide loans, including forgivable loans, to commercial property owners who will then provide small businesses with rent reductions for April, May and June.

“To do this we're going to need to work in partnership with provincial and territorial governments who govern the commercial property owner/tenant relationships,” Morneau said.

Morneau said there will be more information announced on the rent assistance program in the near future.

In an emailed statement, the Canadian Chamber of Commerce said the Canada Emergency Business Account criteria expansion is a positive step, as is news about the new rent assistance program for small businesses, but it will continue to advocate for the government to remove payroll criteria from the program entirely to ensure that any business that needs bridge financing can obtain assistance.

“In addition, we remain concerned that defining payroll as that provided via T4 excludes many entrepreneurs from qualifying. Many small business owners pay themselves through dividends (T5) and have only contractors as employees. The government should expand the definition of payroll to capture the ways different types of business calculate it,” the statement says.

“Many businesses that meet the criteria outlined in the program are being denied financing. We urge the government to work closely with Canada’s financial institutions to ensure that all businesses receive the financing they need.”

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