How to Use CEBA Loan? The Do’s and Don’ts


The Canada Emergency Business Account (CEBA) has been a crucial support for small businesses during the COVID-19 pandemic. Understanding how to appropriately use the CEBA loan is key to maximizing its benefits and ensuring compliance with its terms. This guide outlines the do’s and don’ts of utilizing the CEBA loan.

What is CEBA?

CEBA was introduced to provide financial relief to businesses impacted by the pandemic. It offered interest-free loans, with a portion forgivable, to help businesses cover essential operating costs.

The Do’s of Using CEBA Loan

  • Cover Operating Expenses: Use the funds for permissible operating costs such as rent, utilities, payroll, insurance, and property taxes.
  • Maintain Records: Keep detailed records of how you spend the CEBA funds. Good record-keeping is essential for audit purposes and for applying for loan forgiveness.
  • Financial Planning: Incorporate CEBA into your broader financial strategy. Consider how the loan can help stabilize your business and support its recovery and growth.
  • Seek Advice: Consult with financial advisors or accountants to understand the best ways to utilize the loan in line with your business’s financial strategy.

The Don’ts of Using CEBA Loan

  • Avoid Non-Essential Spending: Do not use CEBA funds for non-operating expenses. Ineligible uses include funding dividends, increasing management compensation, or debt repayment that does not improve cash flows.
  • Don’t Overlook Repayment Terms: Failing to adhere to repayment terms can result in losing out on the forgivable portion of the loan and incurring additional interest costs.
  • Avoid Commingling Funds: Keep CEBA funds separate from other business funds. This makes tracking and reporting easier and more transparent.
  • Don’t Neglect Future Planning: While CEBA provides immediate relief, it’s important to plan for its repayment and consider the long-term financial health of your business.

Maximizing the Impact of CEBA

  • Strategic Investment: Consider investing in areas that will drive revenue growth or efficiency, such as marketing, technology upgrades, or process improvements.
  • Supporting Cash Flow: Use the loan to stabilize or improve your business’s cash flow, ensuring you can continue operations and start planning for post-pandemic recovery.

Understanding Compliance and Audit

Be aware that the use of CEBA funds may be subject to audit by the government. Ensuring compliance with the terms of the loan is crucial to avoid penalties or legal issues.

Preparing for Repayment

Plan for the repayment of the CEBA loan, particularly the non-forgivable portion. Understand the repayment schedule and work it into your financial planning.

The Role of CEBA in Business Recovery

CEBA is not just a financial relief measure but an opportunity to strengthen your business’s foundation and prepare for future growth and challenges.


Using the CEBA loan effectively requires careful consideration of what the funds should and should not be used for. By adhering to these guidelines, small businesses can leverage the CEBA loan to navigate through current challenges and lay a strong foundation for future success.

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