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This program which will be implemented by eligible financial institutions will provide interest-free loans of up to $40,000 to eligible small businesses, which must be used to cover their non-deferrable expenses (see list of non-deferrable expenses below).

Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25 percent (up to $10,000). It will be important to contact your bank to discuss the terms of repayment if you are considering repaying a portion of the loan early. The forgiven portion of the loan is determined based on the specific terms of each loan agreement, which may vary among different financial institutions. In some cases, repaying a portion of the loan prior to January 1, 2021 may result in a reduction of the forgiven amount.


UPDATE – October 14, 2020 - The Department of Finance has announced that an expanded Canada Emergency Business Account (CEBA), which would enable businesses, and not-for-profits eligible for CEBA loans—and that continue to be seriously impacted by the pandemic—to access an interest-free loan of up to $20,000, in addition to the original CEBA loan of $40,000. Half of this additional financing would be forgivable if repaid by December 31, 2022. Additionally, the application deadline for CEBA is being extended to December 31, 2020. An attestation of the impact of COVID-19 on the business will be required to access the additional financing. Further details, including the launch date and application process will be announced at a later date.


The following businesses are specifically excluded from CEBA eligibility:

  • A government organization or body, or an entity wholly owned by a government organization or body;
  • A non-profit organization, registered charity, union, or a fraternal benefit society or order, or an entity owned by such an organization, unless the entity is actively carrying on a business in Canada (including a related business in the case of a registered charity) that earns revenue from the regular supply of property/goods or services;
  • An entity owned by any Federal Member of Parliament or Senator; or,
  • An entity that promotes violence, incites hatred or discriminates on the basis of sex, gender identity or expression, sexual orientation, colour, race, ethnic or national origin, religion, age, or mental or physical disability, contrary to applicable laws.

Eligible small businesses and not-for-profit organizations must qualify under one of two following application streams:


Payroll Stream

To qualify the business must demonstrate they paid between $20,000 to $1.5 million in total payroll in 2019 (this was revised on April 16th from previously announced range of $50,000 to $1 million).

Application for eligible small business that qualify through the payroll stream is open April 9, 2020 and must be completed through your business’s main financial institution.


Non-Deferrable Expenses Stream

The Prime Minister, Justin Trudeau, announced on May 19th an expansion to the eligibility criteria for the Canada Emergency Business Account (CEBA) that will allow more Canadian small businesses to access interest free loans. These expanded criteria are referred to as the “Non-Deferrable Expenses Stream”.

The program will now be available to a greater number of businesses that are sole proprietors receiving income directly from their businesses, businesses that rely on contractors, and family-owned corporations that pay employees through dividends rather than payroll. 

To qualify under the Non-Deferrable Expenses Stream, applicants with payroll lower than $20,000 would need:

  • A business operating account at a participating financial institution
  • A Canada Revenue Agency business number, and to have filed a 2018 or 2019 tax return.
  • 2020 eligible non-deferrable expenses between $40,000 and $1.5 million. 

The applicant’s total incurred and projected Eligible Non-Deferrable Expenses, used to determine whether such expenses are between $40,000 and $1.5 million, are measured as they stood on March 1, 2020. Under all expense categories, the amounts to be included in the total are those actually paid in January and February 2020, as well as those for which a legal or contractual obligation existed on March 1, 2020, for the applicant to pay the expense within the remainder of 2020 and which cannot be avoided or deferred beyond 2020 even during a period of shut down and depressed revenues as a result of COVID.

Non-Deferrable Expenses include the following categories:

  • 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;
  • Payments 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;
  • Payments incurred under agreements with independent contractors and fees required in order to maintain licenses, authorizations or permissions necessary to conduct business by the Borrower.
  • Payments incurred for materials consumed to produce a product ordinarily offered for sale by the Borrower (note from CEBA website – “In addition, expenses for livestock feed are considered “Eligible””);

***NOTE – The above list is intended to be a complete list of eligible expense categories. An expense that does not specifically fall into any of the above categories should not be considered a non-deferrable expense for CEBA eligible spending purposes or for the non-deferrable expense stream eligibility thresholds. ***

Starting on June 26, 2020, eligible businesses which qualify based on the above criteria can apply for the CEBA loan through the Non-Deferrable Expenses Stream through their main financial. In addition to their application through their primary financial institution applicants under this stream will be directed to a CEBA website to provide supporting documentation as evidence for the 2020 non-deferrable expenses.

Due to the complex nature of the CEBA guidelines and eligible expense criteria, we highly recommend that anyone considering applying for the CEBA loan review information provided at the following links in order to familiarize themselves with these guidelines before applying. Eligible businesses must apply by October 31, 2020 (this was extended from the previous deadline of August 31, 2020).

For more information on the CEBA eligibility criteria and application process visit

For the CEBA document upload guide (Non-Deferrable Expenses Stream only) visit

For frequently asked questions regarding the document upload process visit


The “Do’s” and “Don’ts” of CEBA Spending

For those businesses that have received or are expecting to receive CEBA funding, it will be important to keep in mind the restrictions that apply on use of CEBA funds. The criteria for use of CEBA funds specifically requires that the funds be used to fund non-deferrable operating costs of the businesses.

It is important to know that the CEBA loan program may be subject to review by the government at a later date to ensure compliance, i.e. CRA Review or Audit. Businesses that are found to have not used the funding for eligible purposes may risk losing access to the 0% rate of interest or forgiveness components of the loan.

In order to ensure that your business is utilizing it’s CEBA funding for eligible purposes, keep in mind the following “Do’s” and “Don’ts” (this list may be expanded as additional information comes in):

The “Do’s”

  • Use the funds to pay non-deferrable expenses (see categories above).


The “Don’ts”

  • Do not use the funds to pay for costs that do not fit into the non-deferrable expense categories. If an expense does not fit into one of the specific eligible expense categories, the expense is not eligible and for those applying through the non-deferrable expense stream it should not be counted toward the $40,000 threshold of 2020 Eligible Non-Deferrable Expenses.
  • Do not use the funds to invest in a GIC, savings or trading accounts.
  • Do not use the funds to loan money to someone else, including another company that you may own or control.
  • Do not use the funds to pay additional dividends or additional management salary.
  • Do not use the funds to re-finance or prepay an existing loan, i.e. make an extra payment.
  • Do not use the funds to purchase capital property or assets.

It may not look good if the day or week after you receive the CEBA loan, you go out and purchase a new truck and pay cash…!


It will be important to be able to support the used of CEBA funds for these eligible purposes in the event of a future CRA review.

For more information on the CEBA visit

If you have any questions about eligible spending for the CEBA, or other questions about CEBA or the many other COVID-19 relief measures, contact Gregory Harriman & Associates LLP by email at This email address is being protected from spambots. You need JavaScript enabled to view it. or by phone at 1-403-934-3176.