CEBA and business loans in Canada: Discover these options and how it works!
Navigating the financial landscape as a small business owner in Canada can be tough, especially after recent economic shifts. That’s where CEBA and business loans step in, offering vital support when it’s needed most.
Originally launched during the pandemic, CEBA helped thousands of entrepreneurs stay afloat with interest-free funding of up to $60,000. Now, the focus has shifted to repayment and planning ahead.
Whether you’re managing an existing loan or exploring new financing options, understanding your choices today is key to building a more resilient business tomorrow.
Understanding CEBA: A Comprehensive Overview
For Canadian entrepreneurs seeking financial stability and growth, understanding the Canada Emergency Business Account (CEBA) is crucial.
Originally launched in 2020 as a response to the economic impact of COVID-19, CEBA quickly became a key element in the federal government’s support strategy for small businesses and not-for-profits across the country.
CEBA offered interest-free loans of up to $60,000 to help eligible businesses cover non-deferrable operating expenses, such as rent, utilities, insurance, and wages.
Although the application window has closed, thousands of businesses are still managing repayments and leveraging the loan’s favorable terms as part of their financial strategy in 2025.
A defining feature of CEBA and business loans is the partial loan forgiveness incentive. If businesses repaid at least $40,000 of the loan by the government-set deadline (which was extended to January 18, 2024), up to $20,000 could be forgiven.
For many, this was a lifeline that turned debt into an advantage. Those who missed this deadline are now repaying the remaining balance as a low-interest loan due by December 31, 2026.
Eligibility criteria for CEBA loans
To qualify for CEBA and business loans under the original program, businesses had to meet specific requirements.
Most notably, the applicant needed to be a Canadian-operated business with an active business bank account opened before March 1, 2020. The business also had to demonstrate that it was operational and adversely affected by the pandemic’s economic impact.
Eligibility came in two streams. One was based on payroll, where businesses needed to show employment income paid between $20,000 and $1.5 million in 2019.
The second stream was for those with lower payroll but eligible non-deferrable expenses of $40,000 or more, such as rent, property taxes, and insurance. These flexible criteria allowed a wide range of businesses, from retail shops to local service providers, to qualify for the support.
Revenue Criteria
An essential component of the CEBA application was demonstrating a revenue decline due to the pandemic. In many cases, businesses had to show a minimum 30% drop in gross revenue compared to the same period in the previous year.
This revenue loss had to be tied directly to COVID-19’s impact, such as decreased customer activity or government-mandated closures.
Applicants needed to provide comprehensive documentation to support their claim. This included monthly revenue statements, proof of eligible non-deferrable expenses, and employment records.
Non-profit organizations and charities were also eligible, provided they could show a similar decline and met other program conditions. This requirement ensured that funds were directed to businesses that truly needed relief to maintain operations and retain employees.
Other Considerations
While new CEBA applications are no longer accepted, it’s important to understand these criteria because repayment terms, forgiveness eligibility, and audit reviews are still active.
Any discrepancies or lack of documentation could lead to issues with loan forgiveness or future access to government-backed financial programs.
For new or growing businesses, understanding the structure of CEBA loans provides valuable insight when exploring alternative financing options available today.
The impact of CEBA on small businesses
The CEBA and business loans program played a pivotal role in sustaining nearly 900,000 Canadian small businesses during the pandemic by injecting over $49 billion in interest-free capital to support payroll, rent, and essential operations.
According to a 2024 CFIB analysis, about 75% of borrowers have fully repaid their CEBA balances, and those who repaid in full on time report significantly stronger financial health, characterized by healthier cash flow, reduced debt, and more stability, compared to those who deferred or refinanced.
However, the repayment journey hasn’t been easy for everyone: around 30% of businesses resorted to new debt to cover their CEBA obligations, and many now struggle under the weight of 5% interest charges on previously forgivable amounts.
Despite these challenges, the broader economic impact has been meaningful.
The CEBA initiative helped protect employment and business continuity during lockdowns, contributing to higher GDP and lower unemployment than would have been expected without intervention.
Government data shows that sectors most dependent on face-to-face services, namely hospitality, construction, and retail, accounted for the highest CEBA uptake and outstanding loan balances; these businesses experienced slower recovery and, in some cases, faced increased bankruptcy rates as repayment deadlines loomed.
Comparing CEBA loans with traditional options
Unlike traditional business loans that quantify creditworthiness through historical revenues, stringent collateral, and credit scores, CEBA and business loans prioritized speed and accessibility during a crisis.
CEBA required only basic payroll evidence or non-deferrable expenses, deliberately sidestepping typical underwriting hurdles to rapidly deliver up to $60,000 per business in mere days.
This open-access approach meant that smaller enterprises, often excluded by conventional lenders, could secure vital support without lengthy approvals or high-interest commitments.
Traditional financing options, such as term loans, commercial mortgages, or lines of credit, typically involve interest rates, amortization schedules, and slower disbursement timelines.
In contrast, CEBA initially offered up to one-third forgiveness and total interest-free access until early 2024, a benefit unmatched by conventional lenders.
However, conventional lenders still offer advantages CEBA lacked: flexibility in loan structuring, longer repayment periods, access to larger capital through programs like CSBFP, and relationship-driven support.
Business loan options available in Canada
In 2025, Canadian entrepreneurs have a variety of loan options beyond CEBA and business loans, ranging from government-backed programs to private-sector solutions.
Canada Small Business Financing Program (CSBFP)
One of the most significant tools is the Canada Small Business Financing Program (CSBFP), which helps small enterprises access up to $1 million in funding by sharing up to 85 % of the loan risk with lenders.
This guarantees easier access to capital for purchasing equipment, real estate, or leasehold improvements, often with more flexible terms than purely commercial financing.
Business Development Bank of Canada (BDC)
The Business Development Bank of Canada (BDC) offers tailored lending solutions for businesses at different stages.
These include small‑project loans under $100,000, larger growth and working capital loans, and startup financing up to $150,000. BDC emphasizes flexibility by providing interest-only periods, seasonal repayment structures, and no penalty for early repayment.
In 2025, BDC also launched the “Pivot to Grow” fund, a $500 million initiative offering capital and advisory services to help SMEs facing export and supply-chain pressures.
Traditional options
Major commercial banks, such as RBC, TD, CIBC, BMO, Scotiabank, and National Bank, continue to offer traditional lending options including secured and unsecured term loans, lines of credit, and equipment financing.
These institutions often integrate government loan programs like CSBFP into their offerings.
Borrowers benefit from established banking relationships, speedy online applications, and occasional sector-specific terms or funding, especially in industries like agriculture, tech, or franchising.
Beyond conventional banks, alternative lenders are gaining traction, offering revenue-based financing, merchant cash advances, and peer-to-peer lending options. These can be ideal for businesses that either lack collateral or need rapid funding.
Revenue‑based financing ties repayments to a percentage of monthly revenues, creating a variable payment schedule that aligns with performance, an arrangement increasingly popular in the tech and e‑commerce sectors.
How to apply for a business loan in Canada?
Applying for a business loan in Canada starts with understanding your financing goals.
Whether you’re launching a startup, expanding operations, or investing in new equipment, the type of loan you choose will influence your approval chances, interest rates, and repayment terms.
The most common options include term loans, lines of credit, and government-backed programs like the Canada Small Business Financing Program (CSBFP).
Gather your documents
The next step is preparing your documentation. Most lenders, whether traditional banks, credit unions, or institutions like BDC, will request a detailed business plan that outlines your objectives, market research, and financial projections.
You’ll also need to provide recent financial statements, tax returns, proof of revenue, and legal documents such as business registration and ownership structure.
A strong application demonstrates both financial health and a clear strategy for using the funds responsibly.
Make the request
Once you’ve gathered all necessary information, you can apply through your preferred lender. Many Canadian banks and financial institutions offer online applications, while others may require an in-person meeting.
If you’re applying through CSBFP, your lender will submit the loan on your behalf to the government for backing. After submitting your application, be prepared to answer follow-up questions and provide additional details to support your request.
After approval, carefully review the terms and conditions. Pay close attention to the interest rate (fixed or variable), repayment schedule, fees, and any collateral requirements.
Understanding the full loan agreement will help you manage your finances effectively and maintain a healthy cash flow as your business grows.
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FAQ – Frequently Asked Questions about CEBA Loans
What is the CEBA program?
The CEBA program provides interest-free loans to small businesses and not-for-profits to help cover their operating costs during challenging economic times.
How much funding can I receive through CEBA?
Eligible businesses can receive up to $60,000 through CEBA, with a portion of the loan being forgivable if repaid on time.
How do I apply for a CEBA loan?
The program is closed to new applicants.