Please note: the federal government is constantly updating their website as new information is announced. Remember to check Canada’s official coronavirus webpage and CREA’s COVID-19 online hub to stay up to date.
On Wednesday, May 20, Prime Minister Justin Trudeau announced expanded eligibility for Canada Emergency Commercial Rent Assistance (CECRA), and that the program will be open for applications on Monday, May 25.
Updated program eligibility now makes it available to property owners who do not hold a mortgage, which addresses an oversight identified by the Canadian Real Estate Association (CREA) in a recent written brief to the House of Commons Standing Committee on Finance.
CECRA will provide forgivable loans to qualifying commercial property owners that will cover 50% of three monthly rent payments for impacted small business tenants who are experiencing financial hardship during April and May (retroactive), and June. Qualifying small businesses will:
- 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 experienced at least a 70% decline in pre-COVID-19 revenues, compared to revenues in the same period in 2019, or average of revenues earned in January and February of 2020.
The loans will be forgiven if the qualifying property owner agrees to reduce the small business tenants’ rent by at least 75% under a rent reduction agreement, which will include a term not to evict the tenant while the agreement is in place. The small business tenant would cover the remainder, up to 25% of the rent.
As an example, for a small business tenant paying $10,000 per month:
- the government will cover 50% of their rent through CECRA ($5,000);
- the property owner will forgive 25% of the rent ($2,500); and
- the tenant will pay 25% of the rent ($2,500).
To find out if CECRA can help your small business, we encourage you to consult the Canada Mortgage and Housing Corporation’s website.
CECRA is part of the Government of Canada’s COVID-19 Economic Response Plan. The government is constantly assessing the evolving situation and is likely to introduce additional measures as it deems necessary. We are monitoring the implementation of existing measures and continue to advocate on behalf of REALTORS® as new initiatives are developed.
This email is for information purposes only and is not a substitute for professional advice. If you need professional advice you should consult a lawyer, accountant or other qualified professional.