Coronavirus | Finance & Taxation | Store Operations

Government provides details on Rent Assistance Program for small retailers

April 29, 2020

The federal government has issued some clarification on the Canadian Emergency Commercial Rent Assistance (CECRA) program that would see rents reduced for April, May and June to 25% of normal levels for small retailers and businesses that have seen a 70% or greater reduction in revenues.  

Details on the forthcoming program for larger retailers – and for those SMEs which have not experienced a 70% or greater reduction in sales – have not yet been released and may not appear until after May 1, 2020.

The CECRA program will benefit retail companies with less than $20 million in gross annual revenue, measured at the parent company level.  The assistance will be available for one or more properties each with gross rent not exceeding $50,000/month, hence a small retailer could have total rent exceed $50,000 across several properties.  The baseline for revenue loss measurement is the same as that for the Canadian Emergency Wage Subsidy (CEWS), so either the same month last year, or the average for January and February 2020.

The program has to be applied for by the landlord with the final date for any such application being August 31, 2020. In essence, the landlord will abate 25% of gross rent, the tenant will be required to pay 25% of the gross rent and the other 50% will be paid through a forgivable loan to the landlord.

If rent has already been collected from the tenant at the time of approval, a credit to the tenant for a future month’s rent (i.e. July for April) is acceptable if agreed upon by the landlord and tenant. The statement also indicates “this can be a flexible 3-month period”, which may imply that it can begin on the 15th of any month or may perhaps be prorated over a longer term.  RCC will seek further clarification on the latter statement. 

CECRA loans to the landlord will be forgiven if the property owner complies with all applicable program terms and conditions including to not seek to recover rent abatement amounts after the program is over. Nor can the landlord evict in any of April, May and June months. 

It is not a compulsory program for any landlord or tenant but one expected to have broad appeal in the alternative to non-payment, eviction and litigation. 

For more information, visit CMHC’s website.

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