Canada Emergency Commercial Rent Assistance (CECRA)
Prime Minister Justin Trudeau introduced a rent payment assistance program that would be available to small businesses facing financial hardships due to COVID-19 on April 24, 2020. This program will lower rent by as much as 75% for certain small business tenants that have been affected.
The main points of the program are as follows:
- The program will provide forgivable loans to qualifying commercial property owners to cover 50% of three monthly rent payments that are payable by eligible small business tenants who are experiencing financial hardship during April, May, and June.
- The loans will be forgiven if the property owner agrees to reduce the eligible small business tenant’s rent by at least 75% for the three corresponding months under a rent forgiveness agreement, which will include a moratorium on evictions while the agreement is in place. The small business tenant would cover the remainder, up to 25% of the rent.
- Impacted small business tenants are businesses paying less than $50,000 per month in rent and who have temporarily ceased operations or have experienced at least a 70% drop in pre-COVID-19 revenues. This support will also be available to non-profit and charitable organizations.
Eligibility Guidelines for Applicants
- Must own commercial property, occupied by one or more impacted small business tenant, which is:
- A business that pays no more than $50,000 in monthly gross rent per location.
- Generates no more than $20 million in gross annual revenue (calculated on a consolidated basis if applicable).
- Has experienced at least 70% decline in pre-COVID revenues.
- Must enter (or already have entered) into a legally binding rent reduction agreement for the period of April, May, and June 2020, reducing tenant’s rent by at least 75%.
- Rent reduction agreement needs to include:
- Moratorium on eviction for the period during which the property owner agrees to apply the loan proceeds.
- Declaration of rental revenue included in the attestation
- If the landlord and tenant companies are owned by the same person, the following guidelines need to be in place:
- A formal lease agreement must be in place between the landlord and tenant companies.
- The inception date of the agreement needs to be prior to April 1, 2020.
- The rent amount must be within market rates.
- Properties with or without a mortgage are eligible.
- Small businesses that opened on or after March 1, 2020 are not eligible.
Applying for the Program
The CECRA will be administered by the Canadian Mortgage and Housing Corporation (CMHC). The CECRA for small businesses application portal opens at 8:00 a.m. EST on May 25, 2020 and applications will be available until September 30, 2020. Support would be retroactive to April 1.
UPDATE – The program has been extended once again for the month of September. Read full press release here.
Those who qualified for the CECRA based on existing program parameters will be able to apply for the additional month based on having a 70% revenue decline for April, May and June, without reassessing whether they continue to have a 70% revenue decline in July, August or September.
Participation in the one-month extension is voluntary. Both existing applicants to the CECRA and new applicants are able to opt for the September rent reduction.
Existing applicants will need to reapply for the month of September. New applicants will have the choice of applying for the three-month initial period, four months, five months or six months.
Apply for the CECRA program here.
We will continue to monitor these programs and communicate to you if further information is announced.
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