Government announces the Canada Emergency Commercial Rent Assistance for small business
The federal government has reached an agreement in principle with all provinces and territories to implement the Canada Emergency Commercial Rent Assistance (“CECRA”) for small businesses. The provinces and territories have agreed to share up to 25% of the costs, subject to the terms of agreements with the federal government.
The CECRA 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 mortgaged property owner agrees to reduce the eligible small business tenants’ rent by at least 75% for the three corresponding months under a rent forgiveness agreement, which will include a term not to evict the tenant while the agreement is in place.
Thus, the CECRA will lower rent by 75% for small businesses that have been affected by COVID-19. The small business tenant would cover the remainder, which would be no more than 25% of the rent. The federal government and the provinces/territories will effectively subsidize 50% of the rent, so the property owner would lose 25% of the total 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.
Further details on CECRA will be shared in the near future once final terms and conditions are available. The government expects the CECRA to be operational by mid-May, with commercial property owners lowering the rents of their small business tenants payable for the months of April and May, retroactively, and for June. The forgivable loans would be disbursed directly to the mortgage lender.