Canada Emergency Commercial Rent Assistance (CECRA) For Small Businesses

Canada Emergency Commercial Rent Assistance (CECRA) for small businesses provides relief for small businesses experiencing financial hardship due to COVID-19. It offers forgivable loans to eligible commercial property owners to:

• reduce the rent owed by their impacted small business tenants
• meet operating expenses on commercial properties

Property owners must offer a minimum of a 75% rent reduction for the months of April, May and June 2020.

Eligibility

To qualify for CECRA for small businesses, the commercial property owner must:

• own or be the landlord of the commercial real property* which is occupied by one or more impacted small business tenants
• enter (or have already entered) into a rent reduction agreement for the period of April, May and June 2020, reducing an impacted small business tenant’s rent by at least 75%
• ensure the rent reduction agreement with impacted tenants includes a moratorium on eviction for the period of April, May and June 2020
• have declared rental income on your tax return (personal or corporate) for tax years 2018 and/or 2019

NOTE: CECRA for small businesses doesn’t apply to any federal, provincial, or municipal-owned properties.

* Commercial Real Property is defined as commercial properties with small business tenants. Commercial properties with a residential component and multi-unit residential mixed-use properties would equally be eligible with respect to their small business tenants.

IMPORTANT: CECRA for small businesses is administered undifferentiated for properties with mortgages, other forms of debt or no mortgages at all.

What is an impacted small business tenant?

Impacted small business tenants are businesses — including non-profit and charitable organizations — that:

• 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)
• have experienced at least a 70% decline in pre-COVID-19 revenues **

NOTE: Eligible small business tenants who are in sub-tenancy arrangements are also eligible, if these lease structures meet program criteria.

** Small businesses can compare revenues in April, May and June of 2020 to that of the same period in 2019 to measure revenue losses. They can also use an average of their revenues earned in January and February of 2020.

How It Works

CMHC administers CECRA for small business on behalf of the Government of Canada and our provincial and territorial partners.

The program offers assistance for the months of April, May and June 2020.

• Property owners can apply later and the program will be applied retroactively.
• Property owners may still apply for assistance once the 3-month period has ended if they can prove eligibility during those months.
• Property owners must refund amounts paid by the small business tenant for the period. ***

*** If rent has been collected at the time of approval, a credit to the tenant for a future month’s rent (i.e. July for April) is acceptable — if agreed upon by both the property owner and the tenant. This can be a flexible 3-month period.

The deadline to apply is August 31, 2020.

CMHC will provide forgivable loans to eligible commercial property owners. Funds will be transferred to the property owner’s financial institution.

• The loans will cover 50% of the monthly gross rent owed by impacted small business tenants during the 3-month period of April, May and June 2020.
• The property owner will be responsible for no less than half of the remaining 50% of the monthly gross rent payments (paying no less than 25% of the total).
• The small business tenant will be responsible for no more than half of the remaining 50% of the monthly gross rent payments (paying no more than 25% of the total).

Note: If you are a tenant and struggling to pay your portion, alternate programs are available to assist you.

Loan forgiveness

CECRA for small businesses loans will be forgiven if the property owner complies with all applicable program terms and conditions — including to not recover forgiven rent amounts when the program is over.

Apply for CECRA

The application process is anticipated to open in the second half of May 2020. It will be open to eligible property owners.

The online application process will include both fillable fields and templates of the documents required. Property owners will need to provide information to prove eligibility including:

• proof of an existing rent reduction agreement
• moratorium on eviction, and
• small business tenant financial hardship (i.e. attestation of 70% decline in revenue)

More program details will be provided soon — including when and how to apply for CECRA for small businesses.

Visit the website