CANADA’S BANKS ARE preparing to start offering government-backed Canada Emergency Business Account loans to small businesses as soon as next week amid a surge of requests for relief from business owners.
Banks have been rushing to roll out a program by which the federal government will guarantee loans of up to $40,000 interest-free until the end of 2022.
The loans are part of a package of measures announced late last week by federal Finance Minister Bill Morneau, offering relief for small- and medium-sized businesses suffering from restrictions put in place to curb the spread of the new coronavirus.
On Wednesday, Canadian Imperial Bank of Commerce announced it is launching a digital application process for the loans and expects to make them available during the week of April 6. Banks are expecting hundreds of thousands of businesses to apply, and are already fielding large volumes of calls from clients requesting to defer payments on mortgages and other loans and credit products.
The federal government has promised $25-billion to guarantee the loans, removing the risk for banks. One quarter of each loan, up to $10,000, will be forgiven if businesses repay their balance before December 31, 2022. If the loans aren’t repaid by that date, they can be converted into three-year term loans charging 5-per-cent interest, according to a CIBC statement.
The loans will be available to small- and medium-sized businesses as well as non-profits that have a registered operating company in Canada, had annual payrolls between $50,000 and $1-million in 2019, and apply to the primary bank that currently holds their operating account.