Further to our previous blog post, Prime Minister Trudeau announced today further details regarding the Canada Emergency Commercial Rent Assistance Program (CECRA). Details of the announcement can be viewed here.
Under the voluntary program, loans will be provided through Canada Mortgage and Housing Corporation (CMHC) to qualifying commercial landlords to cover 50% of rent payments for April, May and June, 2020. It is still not clear as to whether this applies to basic rent or gross rent and also as to whether these loans will need to be secured.
For a tenant to qualify it must:
- pay less than $50,000 a month in rent; and
- either: (i) have experienced a decline in revenue of at least 70% from pre-COVID-19 levels; or (ii) have temporarily ceased business operations.
Non-profit and charitable organizations are also eligible tenants for the program.
The loans will be forgiven if the landlord agrees to reduce the tenant's rent by at least 75% for these months under a rent forgiveness agreement, which must also include the Landlord's agreement to not evict the tenant while the agreement is in place.
If a landlord takes advantage of the program, it will be required to absorb the 25% shortfall in the original rent (with 50% being applied from the forgivable loan and the tenant being responsible to pay the remaining 25%). Trudeau also noted that if any tenants are unable to pay the remaining 25% of their monthly rent, then they access the $40,000 Canada Emergency Business Account loan program.
The government expects the program to be operational by mid-May and it will apply retroactively to April and May rents. CMHC will administer and deliver the program.
For larger tenants that need rent support and do not qualify for this program, Mr. Trudeau said he will be announcing further information soon.
Article orignally published on 24 April 2020
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