Canada Emergency Commercial Rent Assistance (CECRA)
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This page was last updated on August 11, 2020.
The program provides forgivable loans to commercial property owners who in turn will lower or forgo the rent of small businesses, nonprofit organizations and charities for the months of April, May, and June 2020 (“the Initial Period”). Extensions to the program have been announced that extend the program to include the months of July and August 2020 (“the Extension Periods”). A valid and enforceable lease agreement must be in place prior to April 1, 2020 to be eligible for the program.
The program is intended to cover 75% of commercial rental costs for small businesses who pay less than $50,000 per month in gross rent per location and have either temporarily ceased operations or whose revenues have decreased by 70% or more from pre-COVID-19 levels. Small businesses that were operating from April to June 2019 must compare their gross revenues from April, May and June 2020 to their gross revenues from April, May and June 2019. Small businesses that were not operating from April to June 2019 must compare their average monthly gross revenues from April, May and June 2020 to their average monthly gross revenues from January and February 2020. Small businesses must also have no more than $20 million in annual revenue to be eligible for the program. For groups of companies, revenues are determined on a consolidated basis at the parent company level.
Applications for the program opened on May 25, 2020 and the deadline to apply is August 31, 2020. Those who have already applied can reapply for the August extension until September 14, 2020.
The Prime Minister has indicated that relief for larger businesses is still under discussion with the provinces, but is expected to be announced soon.
How the program works
Commercial landlords will be eligible for interest-free forgivable loans to cover up to 50% of the monthly rent payments from eligible tenants for the Initial Period. They will also be eligible for interest-free forgivable loans to cover up to 50% of the monthly rent payments from eligible tenants for the Extension Periods if the landlord applies for the Extension Periods. These loans will be forgiven on December 31, 2020 provided that the landlord agrees to reduce the rent for eligible tenants by at least 75% for the Initial Period and the Extension Periods (if applicable) and does not evict the tenant. Landlords can apply for the loans through CMHC’s online application portal. Landlords must apply for all three months of the Initial Period at the same time and all impacted tenants must be included on the same application. Landlords may choose to exclude some or all tenants when applying for the Extension Periods.
To illustrate how the program works, let’s assume a small business normally pays monthly rent of $10,000, has seen its revenues decline by more than 70% due to COVID-19, and only wishes to apply for the Initial Period. If the landlord reduces rent by 75% to $2,500 per month for the Initial Period, the landlord will be eligible for a $15,000 forgivable loan ($10,000 rent x 3 months x 50%). The end result will be that the small business itself funds 25% of the rent, the Federal and Provincial governments cover 50% of the rent (i.e. the loan forgiveness), and the landlord covers the remaining 25%.
The Finance Minister has announced changes to the CECRA program. These include:
- Extending the CECRA to include the months of July and August.
- Tenants must meet the revenue decline requirements from April to June in order to be eligible for the July and August extension and they will be deemed to be eligible for the July and August extension if they meet the requirements from April to June.
- Landlords will not be required to include all the tenants that were included in their original application when applying for the July and August extension. They may choose to exclude some or all tenants from the extension.
- Whereas the amount of the CECRA was previously reduced for insurance proceeds and provincial rent supports, these claw backs will be removed retroactively.
More information on the CECRA is available here.