CECRA – Canada Emergency Commercial Rent Assistance

Yesterday, Prime Minister Trudeau announced the CECRA which is a new program designed to provide commercial rent relief to small businesses that have experienced significant revenue declines due to Covid-19 as well as charities and non-profit organizations.

The limited details available as of the time of this post were contained in press releases from the Prime Minister’s Office (PMO) and Ontario government.

Based upon these limited details, it seems that the program will essentially work as follows:

  1. The program is expected to be operational by mid-May, retroactive to April 1, and will close September 30, 2020.
  2. This program is available to small business tenants that pay less than $50,000 per month in commercial rent and have suffered at least a 70% drop in pre-Covid-19 revenue.  Charities and NPOs are also eligible tenants. 
  3. The landlord and tenant would enter into a Rent Forgiveness Agreement that provides for the monthly rent to be reduced by 75% or more the months of April , May and June 2020.  The agreement would also forego eviction.
  4. The intent of the program is that the tenant pays 25% of the rent, the landlord absorbs 25% and the governments will provide assistance for the other 50%.  The government funding will be split 75% and 25% between the federal and provincial governments, respectively.  But the landlord may actually end up funding more.  The Ontario press release makes reference to an expectation that the landlord forgo any profit on the rent.  The 25/25/50 sharing ratio seems to be based upon costs in a break even scenario.
  5. The program will be administered by CMHC which will provide forgivable loans to the landlord that would be disbursed directly to the mortgage lender.  Although no detail was given on how the landlord ultimately receives the benefit of the forgivable loan, presumably it will have to negotiate those details with their mortgage holder.  If there is no mortgage, there seems to be provision for direct payment for fixed costs such as utilities.  There was no mention of the conditions under which these loans would be forgivable.  Perhaps simply having the appropriate agreement is enough – we will have to wait for more detail.

The program is expected to cost $900 million.

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