Feds expand business loan eligibility

Feds expand business loan eligibility
May 21, 2020

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The expanded criteria is a big deal for farmers in the country, says Bibeau

By Jackie Clark
Staff Writer
Farms.com

The federal government has made changes to the Canada Emergency Business Account (CEBA) eligibility criteria to allow more small businesses, including farms, to access interest-free loans, Prime Minister Justin Trudeau announced in a May 19 statement.

“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 statement.

CEBA was launched April 9, 2020, and initially required businesses to have a 2019 payroll between $50,000 and $1 million. The program was then expanded to businesses with 2019 payrolls between $20,000 and $1.5 million, and now businesses with payrolls less than $20,000 can apply to access CEBA loans. 

This expansion of eligibility is big news for Canadian farmers, federal ag minister Marie-Claude Bibeau said in a May 19 statement.

“We heard from many farmers that the Canada Emergency Business Account did not work for them, because many did not meet the payroll criteria,” she said. “We listened to their concerns and changed the eligibility to ensure farmers without payroll can now access the $40,000 interest-free loan available under CEBA – up to $10,000 of which is forgiven if the rest is repaid by Dec. 31, 2022.”

“One of our complaints about the original program is that most of our farming operations didn’t qualify,” Keith Currie, Ontario Federation of Agriculture president, told Farms.com.

“When you look at the typical set up of our farm operations, it’s a single proprietorship or couples in a partnership or a family operation and quite often either salaries aren’t taken, or they’re paid in shares or dividends or products off the farm,” he explained.

The expanded criteria should allow more farms, particularly smaller operations to qualify to access CEBA.

“So, we’re glad of that,” Currie said. “We still need to see a lot of the finer details on it yet but, based on what we’re seeing, it looks like it’s going to cover a lot more of our members.”

This action is another step in the right direction to help the ag industry through the COVID-19 crisis, however, more details are needed to understand how much CEBA can help farmers. 

“We’re coming off a 2019 that saw a lot of things happen in agriculture,” Currie said. Adverse weather conditions at both planting and harvest, market access issues with China, and rail stoppages presented serious economic challenges.

“From a financial aspect, a lot of our operations are stretched and stressed, and so going further into debt, whether it’s this particular program or the other ones that the government has announced … it still has to be paid back,” Currie said.

Individual operations will need to determine whether a CEBA loan is a helpful possibility for them, he added.

“One of the things we want to dive into on the CEBA announcement is what the repayment aspect of that looks like,” in terms of when and how the loans will need to be repaid, Currie explained. 

“At least it’s an opportunity for those who may not qualify to borrow a larger amount through Advanced Payment Program or Farm Credit Canada to get $40,000 of operating money,” he said. “It’s something we hope will help.”

Farmers who still do not qualify for CEBA can look at the Regional Relief and Recovery Fund, Bibeau said in the statement.

“In dealing with the impacts of COVID-19, our Government has consistently said that we are prioritizing speed, and we continue to fill the gaps,” she said. “Farmers can be assured that we have their back, and we are continuing to roll out supports for our agriculture sector.”

Corinna Cooke\iStock\Getty Images Plus photo

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