The Canada Emergency Commercial Rent Assistance (CECRA) for small businesses provides relief for small businesses experiencing financial hardship due to COVID-19.
The goal of this subsidy is to provide unsecured, forgivable loans to eligible commercial property owners in order to reduce the rent owed by their impacted small business tenants and to meet operating expenses on commercial properties.
Property owners must offer a minimum of a 75% rent reduction for the months of April, May and June 2020 in order to apply for this program.
The portal is open for applications as of May 25, 2020.
This is an interesting subsidy because it is a two-party agreement with the final approval based on the landlord’s application success.
As a small business owner that has experienced at least a 70% decline in pre-COVID-19 revenues, you should approach your property owner in order to apply.
As the property owner, you should connect with your tenants to understand if they are struggling to meet rent deadlines as they may qualify.
The deadline to apply is August 31, 2020. The program will be applied retroactively if eligibility during the applicable months can be proven.
The loans will cover 50% of the monthly gross rent owed by impacted small business tenants during the 3-month period of April, May and June 2020.
The property owner will be responsible for no less than half of the remaining 50% of the monthly gross rent payments (paying no less than 25% of the total).
The small business tenant will be responsible for no more than half of the remaining 50% of the monthly gross rent payments (paying no more than 25% of the total).
Everything You Need To Know To Be Eligible For CECRA
What is an impacted small business tenant?
- Impacted small businesses are businesses including non-profit and charitable organizations that:
- Pay no more than $50,000 in monthly gross rent per location
- Generate no more than $20 million in gross annual revenues, calculated on a consolidated basis
- Have experiences at least 70% decline in pre-COVID-19 revenues
What do you need to apply?
- Property owners will need to provide information in support of their application, sign an attestation and agree to the terms and conditions of the loan agreement in order to be eligible for the program
Attestations:
- Tenant or Sub-tenant’s Attestation: property owners must have each of their eligible commercial small business tenants and/or subtenants sign an attestation
- Tenants are responsible for attesting their eligibility with the program requirements
- Property Owner’s Attestation: property owners must sign an attestation confirming the information relating to the property owner and the property provided in the application is correct and attest to their eligibility with the program requirements
Agreements:
- Rent Reduction Agreement: property owners must enter into a legally binding rent reduction agreement with each impacted tenant to confirm the rent reduction in accordance with the program terms and conditions – the agreement is conditional on final approval of application for CECRA
- Forgivable Loan Agreement: property owners must agree to the terms and conditions of the application outlined in the forgivable loan agreement
Who is Eligible?
- To qualify for the CECRA for small businesses the commercial property owners must own commercial real property which is occupied by one or more impacted small business tenants
- Real Property: The Canadian Government defines real property as a commercial property with small business tenants. Commercial properties with a residential component and multi-unit residential mixed-use properties would equally be eligible with respect to their small business tenants
- Enter into a legally binding rent reduction agreement for the period of April, May and June 2020, reducing an impacted small business tenant’s rent by at least 75%
- Must ensure that the rent reduction agreement with each impacted tenant includes:
- A moratorium on eviction for the period during which the property owner agrees to apply the loans proceeds
- A declaration of rental revenue included in the attestation
- A property owner must not be an individual holding federal or provincial political office
