COVID-19 and the Canada Emergency Commercial Rent Assistance
Currently the application process to apply for the Canada Emergency Commercial Rent Assistance (CECRA) loan is now closed and the Canada Mortgage and Housing Corporation (CMHC) will be reviewing applications in the coming months to determine eligibility and compliance. Should non-compliance be found, notices of repayment will be sent to those that will need to repay the loan.
If you as a business or tenant has found an issue with your original application, you can send in a request on the CMHC’s website (found below).
The Canada Emergency Commercial Rent Assistance was implemented to help small businesses that are experiencing financial hardships as a result of COVID-19. CECRA for small businesses offers landlords with a forgivable loan worth 50% of the value of your small business’ rent each month. The loans provided will only be forgiven (i.e. you do not have to pay back this loan) if landlords comply with all applicable program terms and conditions - including to not recover forgiven rent amounts when the program is over.
CECRA for small businesses will cover 50% of the tenants rent, while the tenant pays an additional 25% of the outstanding rent. As a result, the landlord will forgive the remaining 25% of the expected monthly rental payments. This program helps tenants with their monthly rental payments, while the landlord is still receiving 75% of their expected monthly rental income.
To be eligible for the rent reduction, tenants must meet the following requirements:
pay no more than $50,000 in monthly gross rent per location
generate no more than $20 million in gross annual revenues (calculated on an consolidated basis)
and have experienced at least a 70% decline in pre-COVID-19 revenues (at the entity level)
The 70% decline in revenues can be calculated based on two different scenarios.
if your small business was operating during April to June 2019, then compare your gross revenues from April, May, and June 2020 to the revenues for April, May, and June 2019
if your small business was not operating during April - June 2019, then compare your average gross revenues from April, May, and June 2020 to your average gross revenues for January and February 2020
For individuals who qualified for CECRA for small business based on the existing program requirements will automatically be eligible for rent reductions for July, August, and September, without having to reassess whether they continue to have a 70% revenue decline in July and August. This extension is voluntary. As a result, the months that CECRA is available to landlords and tenants ranges from April 2020 - September 2020.
For additional details and the link to apply for the CECRA for small businesses, please see: https://www.cmhc-schl.gc.ca/en/finance-and-investing/covid19-cecra-small-business#4&realProperty