On April 24, 2020, the Ontario Government announced rental assistance for small businesses during COVID-19. The Canada Emergency Commercial Rent Assistance Program (CECRA), has been developed for small business tenants and landlords to share the costs of rent.
An eligible small business tenant is one that:
• Pays monthly rent not exceeding $50,000 in gross rent payments; and is,3
• A non-essential small business that has temporarily closed, or who is experiencing a 70 per cent drop in pre-COVID-19 revenues (determined by comparing revenues in April, May or June to the same month in 2019 or alternatively compared to average revenues for January and February 2020).3
The property owner must meet the following requirements:
• You own property that generates rental revenue from commercial real property located in Canada.1 • You are the property owner of the commercial real property where the impacted small business tenants are located.1
• You have a mortgage loan secured by the commercial real property, occupied by one or more small business tenants.*1
• You have entered or will enter into a rent reduction agreement for the period of April, May, and June 2020, that will reduce impacted small business tenant’s rent by at least 75%.1
• Your rent reduction agreement with impacted tenants includes a moratorium on eviction for the period of April, May and June 2020.1
• You have declared rental income on your tax return (personal or corporate) for tax years 2018 and/or 2019.1
*For those property owners who do not have a mortgage, an alternative mechanism will be implemented. Further information will be outlined in the near future.
All parties must also agree to enter into a rent forgiveness agreement in order to participate in the Canada Emergency Commercial Rent Assistance Program. This agreement will simply state that the landlord agrees to reduce the tenant’s rent by at least 75 per cent for the month of April, May and June; and the landlord agrees to not evict the tenant during those three months.
This forgivable loan program will be paid out directly to the mortgage lender of the qualifying commercial property owner by the Canada Mortgage and Housing Corporation. It is expected that CECRA will be operational by mid-May and be available until September 30, 2020. Support would be retroactive to April 1, 2020 covering April, May and June 2020. The federal government will be sharing more details of this program in the near future.2
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References
1Canada Mortgage and Housing Corporation. (2020, May 1). Canada Emergency Commercial Rent Assistance (CECRA) for small businesses. Retrieved May 4, 2020, from https://www.cmhc-schl.gc.ca/en/finance-and-investing/covid19-cecra-small-business. 2Moher, J. (2020, April 27). Canada Emergency Commercial Rent Assistance Program for Small Businesses. Retrieved May 4, 2020, from https://www.dalelessmann.com/news/blog/canada-emergency-commercial-rent-assistance-program-small-businesses?utm_source=Mondaq&utm_medium=syndication&utm_campaign=LinkedIn-integration. 3Office of the Premier. (2020, April 24). Ontario-Canada Emergency Commercial Rent Assistance Program. Retrieved May 4, 2020, from https://news.ontario.ca/opo/en/2020/04/ontario-canada-emergency-commercial-rent-assistance-program.html.