The federal government today confirmed an agreement with the provinces to launch the Canada Emergency Commercial Rent Assistance program (CECRA), a new commercial rent relief measure to assist landlords and small businesses struggling due to COVID-19.
The measure would reduce rent for small businesses by 75 per cent, while providing loans to mortgaged commercial property owners covering 50 per cent “… of three monthly rent payments that are payable by eligible small business tenants who are experiencing financial hardship during April, May, and June.”
If a participating landlord—who will be required to sign a rent forgiveness agreement as part of the program—reduces an impacted small business tenant’s rent by at least 75 per cent for the three corresponding months, the loans will be forgiven. The small business tenant would be required to cover the remaining 25 per cent of rent owing, while the property owner (who would also cover 25 per cent of the outstanding rent) would promise to not evict the tenant while the agreement was in place. In layman’s terms, the measure would reduce an eligible tenant’s rent to 25 per cent of what they would otherwise have to pay for the three-month period impacted by COVID-19.
Forgivable loans would be distributed directly to the mortgage lender. Participating commercial property owners are expected to retroactively lower small business tenants’ rents for April and May, while also delivering reductions for June.
Eligible small businesses are those that have temporarily ceased operating or have experienced at least a 70 per cent reduction in pre-COVID-19 revenue, and that pay less than $50,000 per month in rent. Charities and non-profits also qualify for support under the program. Canada Emergency Commercial Rent Assistance will be administered by the Canada Mortgage Housing Corporation, in conjunction with the federal government and the provinces and territories, which have agreed to share up to 25 per cent of the costs.
Canada Emergency Commercial Rent Assistance relief is expected by mid-May. Further eligibility terms and conditions, as well as application details, are expected in the near future.
For more information on this federal government program and others designed to assist businesses struggling in the face of COVID-19, such as the Canada Emergency Wage Subsidy, please contact a member of our team at any time.
Armando Iannuzzi, Co-Managing Partner