One in five small businesses too small to qualify for a federal emergency loan: Changes to CEBA urgently needed

Toronto, April 14, 2020 – While the Canada Emergency Business Accounts are welcome relief for small businesses able to access them, many are reporting that eligibility requirements are shutting them out, according to a new survey by the Canadian Federation of Independent Business (CFIB). 

“Nearly 80 per cent of small businesses are fully or partially closed due to COVID-19 with little or no revenue coming in, while their bills continue to pile up,” said Dan Kelly, CFIB’s president. “The Canada Emergency Business Accounts allow the banks to offer a loan of up to $40,000 backed by the federal government with no interest and up to $10,000 forgivable when fully repaid by December 2022. While more debt isn’t the answer for every business owner, thousands of small firms have applied for this much needed lifeline. Unfortunately, the smallest businesses – those with payrolls under $50,000 – are not eligible for the support.” 

CEBA loans require a business to have between $50,000 and $1 million in payroll. As many small firms pay the owner and the owner’s family through dividends rather than salary, this test excludes thousands of long-standing firms. Others, including micro-sized business and newer firms, are also finding themselves ineligible for the program.  

“We’re hearing from many hard-hit businesses that need the loan but don’t qualify, whether it’s because they’re too small, too large or don’t have a payroll,” added Corinne Pohlmann, CFIB’s senior vice-president of national affairs. “Criteria that made sense three weeks ago don’t make as much sense today and we are hoping the federal government will change this program to cover more of those in need as it did with the Canada Emergency Wage Subsidy.”

CFIB recommends the following improvements to CEBA: 

  • Eliminate the payroll eligibility to access the loan, particularly the $50,000 minimum. 
  • If a payroll test remains, drop the minimum payroll requirement to $10,000 and allow dividends paid to family working in the business to be included.
  • Increase the maximum threshold from $1 million to $2.5 million and/or consider alternative means of assisting firms (such as forgivable loans) that have been completely shut down but require larger amounts of cash to help them with their fixed costs. 
  • Ensure all businesses have access regardless of where they bank, including through smaller credit unions
  • Allow businesses to use the loan to access $10,000 as a grant right away to help cover costs, including rent

“As we enter a second month of a virtual shut-down of most small businesses, all solutions need to be structured with flexibility in mind,” concluded Kelly. “The CEBA is a good initiative and could help many businesses hold on, if they are allowed to access the program.”

Some additional survey results for the week of April 13: 

  • 20 per cent of businesses remain fully open, while 49 per cent are partially open and 28 per cent are fully closed
  • 22 per cent of businesses have no sales or revenues, and a third have seen declines of 51 to 99 per cent of their gross revenues
  • On average, the COVID-19 disruption has cost small businesses $206,000
  • 51 per cent of business owners cannot confirm their business will survive if the current restrictions remain until the end of May

Note on survey methodology
These preliminary findings are based on 10,620 responses, collected from CFIB members, to a controlled-access web survey that is still active. Data reflect responses received between April 10 and April 13, 2020. For comparison purposes, a probability sample with the same number of respondents would have a margin of error of +/-0.9%, 19 times out of 20.

For media enquiries or interviews, please contact:
Milena Stanoeva, CFIB

About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 110,000 members across every industry and region. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at