Canada Emergency Commercial Rent Assistance (CECRA)

| 6/18/2020
What is the CECRA?

The federal government launched the CECRA program to provide financial assistance to small businesses in respect of their commercial rent. The program is administrated by the Canada Mortgage and Housing Corporation (CMHC) on behalf of the Federal Government and its provincial and territorial partners. It offers commercial rent assistance for the months of April, May, and June 2020, with the option of extending assistance for the month of July.

The program has been available for application since May 25, 2020, and can be applied retroactively. Property owners are encouraged to participate in the program to assist tenants affected by COVID-19.

How Does the CECRA Work?

Commercial property owners will reduce rent by at least 75% for the months of April, May, and June 2020 for their small business tenants, with the option of extending the assistance for an additional month for July 2020.

CECRA will provide forgivable loans to qualifying commercial property owners to cover 50% of the rent, with the tenant paying up to 25% and the property owner forgiving at least 25%. 

The loan will be forgiven on December 31, 2020, provided the property owner complies with the rent reduction agreement and ensures all attestations and supporting documentation submitted are accurate and truthful.

If the property owner files for bankruptcy, restructures, reorganizes, or dissolves their business, the loans will be needed to be repaid. Also, in the event of default, CMHC has full recourse to recover the CECRA funding from the property owner.

Property owners may still apply for assistance once the three-month period has ended if they can prove eligibility during those months. If rent has been collected at the time of approval, a credit to the tenant for a future month’s rent (e.g., July for April) is acceptable if agreed upon by both the property owner and the tenant. Property owners have until August 31, 2020, to apply.

Who is Eligible for the CECRA?

The CECRA will provide forgivable loans to eligible commercial property owners, rather than direct rent relief to impacted small business tenants or subtenants.

Commercial property owners will need to apply.  To qualify, they must meet the following requirements:

  • The applicant is the property owner of the commercial real property where the impacted small business tenants are located;
  • The applicant has entered or will enter into a rent reduction agreement for the period of April, May, and June 2020, with the option of a one month extension in July,  that will reduce impacted small business tenant’s rent by at least 75%; 
  • The rent reduction agreement includes a moratorium on eviction for those three (or four) months; and
  • A declaration of rental revenue in the attestation.

However, the CECRA will not apply to any federal, provincial, or municipal-owned properties, where the government is the landlord of the small business tenant, with some exceptions.

Only those tenants approved in the April, May and June application are eligible for the July extension.  If a business had an average revenue decline of 70% or more in April, May and June, then they are deemed eligible for the additional month of rent relief.  But not all tenants in the original application need to be included for the July extension.

What is an Impacted Small Business Tenant?

The tenant must be considered a small business tenant, including a non-profit and charitable organization, that:

  • Pays no more than $50,000 in monthly gross rent per location, as defined by a valid and enforceable lease agreement;
  • Generates no more than $20 million in gross annual revenues, calculated on a consolidated basis (at the ultimate parent level); and
  • Experiences at least a 70% decline in pre-COVID-19 revenues*

*To determine the extent of the decline in revenues, a small business that was operating between April and June 2019 will use a comparison of gross revenues earned in April, May, and June 2020 to the same months in 2019. A small business that was not operating during April, May, and June 2019 will compare its average gross revenues from April, May, and June 2020 to an average of gross revenues earned over January and February 2020.

Please note that a small business that opened on or after March 1, 2020 is not eligible for the CECRA.

How Do I Apply for the CECRA?

If both the landlord and small business tenant together qualify for CECRA, the property owner can apply for the commercial rent assistance through the CMHC portal.  

The application is a two-step process:

Step 1. Property owners must register and create an account; and

Step 2. Property owners must complete an application and upload supporting documentation, including:

  • Proof of an existing rent reduction agreement;
  • Moratorium on eviction; 
  • Property owners’ attestation to confirm their eligibility for the program; and
  • Tenant or sub-tenant’s attestation with respect to their financial hardship (i.e., meeting at least 70% decline in revenues).

The deadline to apply is August 31, 2020. Rent assistance can be applied for retroactively.

As of June 30, the Federal Government has simplified the application process for all applicants by removing the requirement to claw-back insurance proceeds and provincial rent supports from the CECRA forgivable loan amount. Existing applicants who are affected will be notified and will have any previously clawed-back amounts restored to their forgivable loan.

When Do I Apply for the CECRA?

The application portal opened on May 25, 2020.  Property owners are asked to register on a staggered basis:

Conditions Apply on 
Property owners who are located in Atlantic Canada, B.C., Alberta, and Québec, with up to 10 tenants who are eligible for the program  Mondays 
Property owners who are located in Manitoba, Saskatchewan, Ontario, and the Territories, with up to 10 tenants who are eligible for the program
All other property owners in Manitoba, Saskatchewan, Ontario, and the Territories
All other property owners in Atlantic Canada, B.C., Alberta, and Québec
All property owners

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