Prime Minister Justin Trudeau announced on Tuesday an expansion to the eligibility criteria for the Canada Emergency Business Account (CEBA) to include many owner-operated small businesses.

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, said the government.

To qualify under the expanded eligibility criteria, the government said 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.
  • eligible non-deferrable expenses between $40,000 and $1.5 million. Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance.

“Canadians are counting on us to protect their jobs and help them pay their bills during this difficult time. By expanding the CEBA, we will be giving more businesses access to the support they need, so they can help protect workers and the jobs they rely on. Today we are helping to keep more businesses open and more Canadians working, so we are better prepared for the recovery to come,” said Trudeau.

The government said expenses will be subject to verification and audit by the Government of Canada. Funding will be delivered in partnership with financial institutions. More details, including the launch date for applications under the new criteria, will follow in the days to come. To date, over 600,000 small businesses have accessed the CEBA, and the government will work on potential solutions to help business owners and entrepreneurs who operate through their personal bank account, as opposed to a business account, or have yet to file a tax return, such as newly created businesses, it added.

“Our government has been taking action since the start of this crisis to support the small businesses that define our Main Streets and provide jobs that Canadians rely on. We have been listening to you throughout this, and will continue to, to make sure we’re delivering the support Canadian businesses need to get through this tough time and be well positioned for success once the recovery begins,” said Minister of Finance Bill Morneau.

“Small businesses are at the heart of our communities, and they drive our national economy. By making our lending supports more generous and inclusive, we’re working hard to save Canadian jobs and businesses. We will continue to be there for Canadian businesses and workers every step of the way through this crisis,” added Mary Ng, Minister of Small Business, Export Promotion and International Trade.
Dan Kelly, President of the Canadian Federation of Independent Business (CFIB),  said the organization welcomes the announcement as CEBA loans have been a lifeline to many small firms, particularly as 25 per cent of the loan (up to $10,000) is forgivable, helping them cover some of their fixed expenses.
“It is good news that family businesses that pay themselves in dividends, those that employ contractors (e.g. gyms) or those that rent chairs (e.g. salons) will soon be able to access the program. It is critical that this expansion of the program be rolled out as quickly as possible, as the firms that were excluded have gone two months with little assistance and are now facing another rent deadline of June 1,” he said.
“It is also encouraging to hear that new businesses and those with personal bank accounts will soon be included through a separate stream of the program. We stand ready to work with government on ensuring the details of this program work for small business owners. With many provinces now looking towards reopening their economies, small businesses will need ongoing support to get through the months ahead. CFIB has recommended to the government that it increase the total amount of the CEBA loans and the forgivable portion. The initial $40,000 may not be enough for many businesses who continue to be shut down or those facing a long recovery period. Further expansions for firms with a 2019 payroll above $1.5 million should also be considered.”

He said the CFIB continues to advocate for important changes to the Canada Emergency Commercial Rent Assistance program.

“Too many businesses will go without the help they badly need because they have no way to access the assistance if their landlord does not participate. CFIB has asked the government to allow commercial tenants who are eligible to access the 50 per cent government portion of the program directly if their landlord does not wish to participate,” said Kelly.