Coronavirus | Finance & Taxation | National

Rent relief for retailers available through Canada Emergency Commercial Rent Assistance (CECRA)

May 25, 2020

The federal government has reached an agreement in principle with provinces and territories to implement the Canada Emergency Commercial Rent Assistance (CECRA) program. 

CECRA provides forgivable government loans to commercial property owners intended to help them lower rent by 75% for small businesses heavily affected by COVID-19 in April, May and June 2020. Smaller retailers who paid rent for those months can also receive a rent reimbursement or rent credit for rent paid in excess of 25%. 

CECRA applications are submitted by a retailer’s landlord and can now be made online. Registration for the application process is staggered by region. View CECRA application.

CECRA covers:

  • Eligible small business tenants, including retailers, paying no more than $50,000 in monthly gross rent per location (as defined by a valid and enforceable lease agreement), and
    • Who have temporarily ceased operations or experienced at least a 70% revenue drop in April, May and June 2020 compared to revenue for those months in 2019 (or to an average of January and February 2020 revenue)
  • Eligible tenants can make no more than $20M in gross annual revenue, calculated on a consolidated basis (at the ultimate parent level)
  • The CECRA program provides forgivable government loans to property owners who agree to reduce a small retail tenant’s rent by at least 75% under a rent reduction agreement for April, May and June 2020.
  • That agreement includes a provision protecting the retail tenant from eviction while the agreement is in place.
  • The small retail tenant covers up to 25% of rent remaining, with the property owner covering the other 25%.
  • The forgivable loan to eligible commercial property owners covers 50% of gross rent owed by the small retailer for April, May and June 2020. With 50% in forgivable loans and with the tenant’s 25% remaining part of the rent, commercial property owners eligible for CECRA should still receive 75% of the amount they expected in rent.

Applications to CECRA are due by August 31, 2020.

What is required from landlords and tenants for the CECRA application?

  • It is just one application that covers April, May and June. It looks to see whether the average revenues for all those three months are 70% or more below the baseline.
  • Forecasts will be accepted for June.
  • Requires landlord application, a rent reduction agreement(s) and landlord and tenant attestations. Portal will be available 24/7 and template documents are available
  • Landlords must agree that the rent that is forgiven, reduced and will never be recoverable or collected through significant or disproportionate rent increases.
  • Tenant attestation covers rent cap of $50,000, enterprise size of $20 million or less and 70% or greater revenue loss when compared to the same months last year or the average of January and February 2020.
  • Non arms-length parties need to show a valid lease and attest that the rent is not above market value.

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