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CEBA loan for Real Estate Investors and Realtors

How to apply for the Canada Emergency Business Account as a realtor or real estate investor

Canada Emergency Business Account (CEBA) loan qualification criteria expanded

A little background on the CEBA loan:

  • As a refresher, a CEBA loan is the $40K interest-free loan that the government offers to small businesses, provided that it is repaid before the end of 2022. 
  • If you repay by Dec 31, 2022, it is not only interest-free, $10K of the loan will be waived. 
  • When it first came out, small businesses would be required to have a payroll of $50K in 2019 to qualify to apply.  The payroll requirement was subsequently lowered to $20K in 2019. 
  • You would still be required to have a business bank account, not a personal bank account, to apply.  The loans are only available for application via the big banks’ system.  If you don’t have a business bank account, you are not able to access the application page. 
  • Many real estate agents and business owners who use primarily subcontractors and pay themselves via dividends did not qualify. 
  • Some real estate agents who have sufficient payroll but used personal chequing account aren’t able to access this loan. 

Expanded criteria announced by Prime Minister Justin Trudeau on May 19, 2020, Tuesday for the CEBA loan:

  • You’re still required to have a business operating account at a participating financial institution
  • A Canada Revenue Agency business number, and to have filed 2018 or 2019 tax return
  • Eligible non-deferrable expenses between $40,000 and $1.5million.  Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance. 

The potential impact on real estate investors who own your real estate properties in the corporation:

  • If you have a corporation, you would have a Canada Revenue Agency Business Number.  
  • If you have non-deferrable expenses between $40K and $1.5 million, chances are, you would be qualified to apply for this $40K loan under the newly expanded criteria.  
  • Non-deferrable expenses would include your property taxes, utilities, and insurance.  I would include property management fees as the non-deferrable expenses as well. 
  • This means that – if your real estate corporation has non-deferrable expenses totaling over $40K, you could be qualified for this $40K loan!
  • We’re still waiting for an official update on the CEBA loan website.  Stay tuned and we would keep you up to date.
  • If you’re real estate investors that do not own properties in a corporation, you would not have a business number with CRA, therefore, you won’t qualify for the loan under the expanded criteria.  Sorry. 

Potential impact on real estate agents/realtors/brokerages:

  • Many real estate agents and self-employed individuals did not qualify to apply for this loan before because they do not have any payroll and they heavily leverage subcontractors instead. 
  • Prime Minister Justin Trudeau acknowledged that their programs haven’t reached this group of small business owners. 
  • With the expanded criteria, now real estate agents and self-employed individuals can apply for this loan, provided that you have a business number with CRA and $40K of non-deferrable expenses. 
  • You should be able to use your HST registration number as your business number – pending the government’s official announcement.  All realtors I know have an HST registration number.  Many small business owners that are self-employed could also register. 
    • In terms of the $40K non-deferrable expenses, common expenses include desk fees, insurance such as RECO insurance, board membership fees, rent if you rent an office, cell phone bills, website subscription service, etc.  
    • Again, we’re waiting for further clarification from the government on what this $40K means and will share with you any future updates. 
  • If you do not have an HST registration number, you likely cannot qualify for the loan under the expanded criteria.  
  • If you do not have a business bank account, as most self-employed sole proprietors do not, the government is working on having a workaround for you.   Prime Minister Justin Trudeau acknowledged that there’s a shortcoming in the current program and they are working on addressing it. 

Until next time, enjoy the nice weather. 

Cherry Chan, CPA, CA

Your Real Estate Accountant