The Canadian Federal government has announced a loan program to help small businesses with the possibility of FREE MONEY to those who qualify.

Updates since the video:

  • 16 April: Government announced that the T4SUM payroll remuneration criteria will be expanded to between $20K and $1.5M.

Here’s the outline from the video:

  • Eligibility Criteria
    • Paid total remuneration (box 14 on T4SUM) of $50K to $1M in 2019 (* expanded to $20K and $1.5M on 16 April)
    • Unclear if Sole Proprietors (not incorporated businesses) will qualify
    • Benefits
    • Up to $40,000 loan
    • Interest free until 31 Dec 2022
    • If 75% is repaid by 31 Dec 2022 the remaining 25% will be forgiven
    • After 31 Dec 2022 it converts to a 3 year term loan at 5%
  • Application
    • Through your normal bank (require a single signature and a business bank account)
    • Most have online applications available now
  • Other Conditions
    • Can only be used to pay non-deferrable operating expenses of the Borrower including, without limitation, payroll, rent, utilities, insurance, property tax and regularly scheduled debt service
    • may not be used to fund any payments or expenses such as prepayment/refinancing of existing indebtedness, payments of dividends, distributions and increases in management compensation
  • Issues
    • Payroll excludes contractors (only T4 employees) and dividends
  • Recommendations
    • Put this money in a separate bank account (recommend a basic cheque account)
    • As you pay eligible expenses pay these funds from the nominated bank account
    • Tag these expenses in your accounting system
      • Xero – use Tracking
      • Quickbooks – use Classes
    • DON’T create a new expense account other than for non-standard expenses
    • When you are able, replenish the funds from your normal bank account
    • By 31 Dec 2022 ensure that you have repaid 75% (and no more)
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