As many of you are already aware, due to COVID-19 concerns we have shut down the office for safety of everyone and to help with the ongoing efforts to “flatten the curve”. As a result, work times have naturally slowed as we are all in this pandemic together.
Per the Canada Stimulus Package announced, a $40,000 loan will be made available to businesses who have a payroll of $50,000 to $1,000,000 in the 2019 year.
From our understanding, this loan will be provided through your company’s main business account (E.G. RBC, TD, CIBC etc) in the form of a line of credit. Below is information that we have gathered on how this works, eligibility and some links as necessary.
Note that at the time of this email, Royal Bank, Scotia Bank and TD Canada trust have publicly announced that they will be in taking applicants for this loan starting on Thursday April 9th, 2020. It is highly like the other institutions will follow suit shortly.
How does this work? Why is it so special?
The loan has been funded by the government of Canada through to a number of financial institutions. Below are some important key points on the line of credit..
- A $40,000 Loan will be provided as a Line of credit.
- After December 31st, 2020 any Outstanding balance on the $40,000 Line of credit will be converted into a 5 year term loan maturing on December 31st, 2025 at which the balance must be paid in full.
- No interest will be charged on this loan until after January 1st, 2023.
- Interest accrues at 5% thereafter
- If 75% of the loan is paid on or before December 31st, 2022, the rest of the loan is forgiven.
Therefore if 75% of the loan is paid back by December 31st 2022 the 25% balance will be taxable income into your company/corporation.
Eligibility
From our understanding the only requirement that lending institutions will be asking for is:
- A copy of your 2019 T4 Summary
- Some institutions may ask for a copy of the T4s as well
- Active business account at the institution you are applying at
Applications differ per lending institution. Some have required that applications will be done through a seperate web portal while some are done through online banking. Please check with your bank to see which applies.
How to apply
Several banks have provided information as to where to apply and information further. Below are some links that will help shortcut this process.
Royal Bank
TD Canada Trust
CIBC
Scotia Bank
BMO
Vancity
Source information from CRA