Government provides more details on Canada Emergency Commercial Rent Assistance
The Canadian Mortgage and Housing Corporation (“CMHC”) has provided additional details regarding the previously-announced Canada Emergency Commercial Rent Assistance (“CECRA”) program for small businesses. To qualify for the CECRA, a property owner must meet the following requirements:
- It owns property that generates rental revenue from commercial real property located in Canada.
- It is the property owner of the commercial real property where the impacted small business tenants are located.
- It has a mortgage loan secured by the commercial real property, occupied by one or more small business tenants.
- It has entered or will enter into a rent reduction agreement for the period of April, May, and June 2020, that will reduce impacted small business tenants’ rent by at least 75%.
- The rent reduction agreement with impacted tenants includes a moratorium on eviction for the period of April, May, and June 2020.
- It declared rental income on its tax return (personal or corporate) for tax years 2018 and/or 2019.
For those property owners who do not have a mortgage, an alternative mechanism will be implemented. Further information will be outlined in the near future. Commercial properties with a residential component and multi-unit residential properties with commercial tenants are also eligible.
Impacted small business tenants are businesses, including non-profit and charitable organizations, who:
- pay no more than $50,000 in monthly gross rent per location (as defined by a valid and enforceable lease agreement),
- generate no more than $20 million in gross annual revenues, calculated on a consolidated basis (at the ultimate parent level), and
- have temporarily ceased operations (i.e., generating no revenues), or have experienced at least a 70% decline in pre-COVID-19 revenues.
To measure revenue loss, small businesses can compare revenues in April, May, and June of 2020 to that of the same months of 2019. They can also use an average of their revenues earned in January and February of 2020.
Program details, including how funds will be disbursed and how to apply, are being finalized and will be available soon.