On April 24th, the Prime Minister announced further details about the Canada Emergency Commercial Rent Assistance (CECRA) program. This program is designed to reduce small business rent costs by up to 75% and support property owners in covering these costs.
The new program is expected to:
- Provide forgivable loans to qualifying commercial property owners to cover 50% of three-monthly rent payments for eligible small business tenants who are experiencing financial hardship during April, May and June.
- These loans will be forgiven if the 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.
- Small business tenants would cover the remainder, up to 25% of the rent.
- Eligibility will be limited to small business tenants or 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.
If your rent is less than $50,000 per month and you have not temporarily ceased operations, get your bookkeeping up to date. We currently do not have information about how the revenue decrease will be calculated. However, based on what we’ve seen with CEWS, up to date financial records will be crucial at this time.
In summary, under this program, a commercial property owner can receive 50% of regular monthly rent in the form of a loan from the government. This loan will be forgiven if the property owner agrees to reduce rent for those months by at least 75%. The property owner will then pay the additional 25% of the normal rent rate, and the tenant will pay the other remaining 25% of the normal rent rate.
It is expected that CECRA will be operation 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.
We will continue to update you on CECRA as more details are released.