Don’t miss out on money by ignoring CEBA

It’s called the Canada Emergency Business Account and it’s been expanded so that most farms now qualify. Don’t let your pride or your disdain for filling out forms prevent you from taking this $40,000 loan and having $10,000 of the loan forgiven.

CEBA is part of the massive flow of funds from a wide range of newly invented programs coming out of Ottawa. No doubt many people need help. No doubt the economy needs stimulus in the midst of a pandemic. What’s less clear is how the mountain of government debt will ever be repaid.

Still, you need to hit the pitches that come across the plate. No one is going to thank you for not taking what the government is offering. Perhaps you don’t want additional debt, but the loan is interest free and if you repay by Dec. 31, 2022, the loan forgiveness is 25 percent ($10,000).

Initially, CEBA was only for businesses with payroll expenses of $20,000 or greater. With the recently announced expansion to the program, a much wider range of businesses are eligible. The main criterion is that you need to demonstrate having non-deferrable expenses of between $40,000 and $1.5 million in 2020.

I haven’t gone through the process and I don’t pretend to know how it works, but I intend to see if our farm qualifies. Some farms involve several business entities and each can apply. Since this is available for all businesses, expect financial institutions to be working overtime.

It’s your financial institution that you need to see to initiate the application. After that, if you don’t have payroll expenses above $20,000, you’ll need to upload documents showing eligible non-deferrable expenses greater than $40,000. A wide range of expenses qualify including wages, rent payments, insurance-related costs, property taxes, utility bills and various other expense categories.

If you get the $40,000 loan, don’t use it as an incentive to spend more money than you otherwise would have. The $10,000 forgivable portion is not a lot of money compared to the expenses many farms face, but every little bit helps. The government website doesn’t say whether or not the forgivable portion will be considered income for tax purposes, but my guess is that it will not.

Some producers won’t feel right taking money they don’t really need. Others will view it as too much hassle. Still others won’t ever realize it’s available.

Recently, I had a conversation with a long-time Saskatchewan farmer and business person who somehow missed understanding the benefits of participating in AgriInvest. Over the years, this farm has forgone government contributions that probably total many tens of thousands of dollars.

Incredibly, the large and well-known accounting firm that did the books for the farm never once questioned why AgriInvest wasn’t being employed. A legitimate argument can be made that AgriStability isn’t worth the time and effort, but AgriInvest is just free money, much like CEBA.

Since CEBA is available to all businesses, it’s not a program that has received much attention within agricultural circles. For that reason, a lot of producers have probably never heard of it. If AgriInvest can be around for many years and not everyone knows to use it, you can be sure that some will also miss the boat on CEBA.

CEBA isn’t the assistance farm groups have been pressing Ottawa for, but like the old saying — don’t look a gift horse in the mouth.

Kevin Hursh is an agricultural journalist, consultant and farmer. He can be reached by e-mail at kevin@hursh.ca.

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