The Canada Emergency Business Account is an essential tool for small businesses that have taken an economic hit as a result of COVID-19 — so here's what you need to know.

What is it?

The Canada Emergency Business Acount is a new, $25 billion program that will provide government-backed loans of up to $40,000 to small businesses and not-for-profits.

The loan will help small businesses cover their operating costs during this period of economic challenges.

The loans will be interest-free for the first year. Businesses that repay the loan on or before December 31, 2022 will also be forgiven 25 percent of that loan (up to $10,000).

Am I eligible?

If you're a small business or not-for-profit that paid between $50,000 to $1 million in total payroll in 2019, then you're eligible.

How do I apply?

If you're eligible, you'll need to contact your financial institution to apply for the loan.

In a bid to encourage more small businesses to keep employees on the payroll, Canada will increase the temporary wage subsidy up to 75 percent for small businesses, backdated to March 15.

The government is also putting a number of other measures in place to help small businesses, including delayed GST/HST payments and additional loans through Export Development Canada.