Canada Emergency Commercial Rent Assistance for Small Businesses Application to Open May 25
Details of the Canada Emergency Commercial Rent Assistance program (CECRA) for small businesses are now available, and applications are set to open on May 25. The program was initially announced in April and will help nonprofits and registered charities cover operating costs during this time of decreased revenue.
The program offers a forgivable, unsecured loan that commercial property owners may use to reduce rent for their impacted small business tenants or to meet the operating costs of the property. It is available for owners of properties with or without mortgage. Impacted tenants themselves may not apply – the application must be completed by the property owner.
CECRA will cover 50% of the rent owed by the small business tenants, the property owner will forgive 25% of the rent, and the remaining 25% must be paid by the tenant. If you are a nonprofit or charity struggling to pay the reduced rent, there are alternate supports available. Recipients of the loan must agree not to collect forgiven rent from their tenants in order for the loan to be forgivable.
To be eligible to apply for the CECRA loan, an organization must meet the following criteria:
Own a commercial property occupied by one or more small business tenants.
Agree to enter into a legally binding rent reduction agreement with each impacted tenant for the period of April, May, and June 2020 wherein the tenant’s rent is reduced by 75%.
This agreement must include a moratorium on eviction during the period which the loan applies, and a declaration of rental revenue included in the attestation.
The small business tenants were open and operating prior to March 1, 2020.
The impacted tenants must also meet certain criteria:
Be a small business, nonprofit, or registered charity.
Pay $50,000 or less in monthly gross rent.
Have a gross annual revenue of $20 million or less.
Have experienced a decline of at least 70% in revenue due to COVID-19.
Tenants may compare their current revenue to either January and February of 2020, or to the same period of April, May, June of 2019.
To be eligible, the property must not be owned by a municipal, provincial, or federal political office, or by a person who holds political office at the federal or provincial level. Excepted are property owners who are lessees of the property pursuant to a ground lease or similar long-term lease from a municipal, provincial, or federal government to operate the property. This exception includes First Nation and Indigenous organizations and governments.
As of June 1, organizations and businesses that are in national parks, national historic sites, or national marine conservation areas also eligible. For these organizations, the Government of Canada will waive up to 75% of their rent for April, May and June. Previously they weren't eligible because they are on federally owned property.
Property owners may apply until August 31, 2020. The loan will retroactively cover all of April, May, and June. There are options available for property owners who have already collected rent during this period, including crediting tenants for the following period. Click here for more detailed information on how to apply.
This program provides further support for nonprofits and charities that are struggling to meet operating costs. However, it may not be helpful for organizations if the property owner does not apply for CECRA. If this is the case, other avenues of financial support may be available. Possible supports are suggested here under ‘FAQs for Small Businesses’.