Last week the federal government announced it will be partnering with the Canada Mortgage and Housing Corporation (CMHC) and the provincial governments to implement the Canada Emergency Commercial Rent Assistance (CECRA) program to provide relief to landlords and eligible small business in respect of commercial rent for the months of April, May and June, 2020. While application details have not yet been announced, support will be retroactive to April 1. The program will be administered by the CMHC.
Landlords will be asked to forego profit from commercial rental properties during these months. The tenant will be asked to pay rent equal to 25% of the landlord’s fixed costs of the property, the landlord will be asked to absorb 25% of the costs and the Federal and Provincial governments will provide a forgivable loan equal to the remaining 50% of the costs.
For the loan to be forgivable, the property owner must reduce the rent payable by the tenant to 25% of the fixed costs for three months. In order to obtain the loan, certain requirements must be met in addition to the rent reductions including a rent forgiveness agreement between the landlord and the tenant and a moratorium on evictions for three months. We will be providing more details on these requirements when they are made available.
Eligible tenants must have monthly gross rent payments of less than $50,000 and be non-essential small businesses that are closed or experiencing a 70% drop in pre-COVID-19 revenues which will be determined in a similar manner to the CEWS revenue reduction. The Ontario government has also listed certain criteria on their site that will exclude businesses from being eligible. Not-for-profit organizations and charities will also be considered for the program, but no further details have been provided.
This program is still in its infancy and we expect more details to be released soon. We will provide further updates as these details become available. For the official release from the Ontario Government, please see their website.
We are happy to discuss any questions you may have about these matters. To review any of our previous updates on COVID-19 please see our website.
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