Applications for the federal government’s Canada Emergency Commercial Rent Assistance (CECRA) for small businesses are set to open May 25.
Prime Minister Justin Trudeau announced Wednesday that the application portal, which will be available through the Canada Mortgage and Housing Corporation, will be open later this month.
“We implore and expect landlords and building owners to understand that we are all in this together.”
The rent relief program, which was announced mid-April, is meant to help lower rent for small and medium-sized businesses (SMBs) affected by COVID-19. CECRA will allow SMBs to pay just 25 percent of their monthly rent, with governments and property owners absorbing the other 75 percent.
The program offers unsecured, forgivable loans to eligible commercial property owners in order to allow them to reduce rent and help them meet operating expenses on commercial properties. Property owners are required to offer a minimum of a 75 percent rent reduction for the months of April, May, and June.
The CECRA is available for small business tenants that have been impacted by COVID-19 and are paying less than $50,000 per month in gross rent, with annual revenues of less than $20 million. The tenants must have experienced at least a 70 percent drop in pre-COVID-19 revenues.
Trudeau hinted that the government is working on a rent relief program for larger companies, with details set to be shared “soon.”
The CECRA requires landlords and property owners to opt into the loan program, which has led to concerns about how the program is being administered. SMBs have pointed to the urgent need for such rent support, as fear of eviction and businesses clossures has been growing.
On Wednesday, Trudeau urged eligible landlords and tenants to apply for the program once it opens up, promising that relief will be provided shortly after May 25.
When asked why the federal government doesn’t choose to provide relief directly to tenants rather than landlords, Trudeau said, “We need [landlords] to understand that they have a deep, vested interest in having tenants [remain].”
“If businesses go under due to COVID-19 we are all going to be worse off,” he added. “We implore and expect landlords and building owners to understand that we are all in this together … this program is there to help them and small businesses.”
As part of CECRA, the federal and provincial governments will collectively pay for 50 percent of the monthly rent through the Canada Mortgage and Housing Corporation, with property owners absorbing the remaining 25 percent. Provinces and territories have agreed to “cost-share” the program and facilitate implementation; they will be responsible for up to 25 percent of costs, subject to terms of agreements with the federal government.
Commercial landlords will be able to have the loans forgiven as long as they can show they provided a reduction in rent to their tenants. Forgivable loans would be disbursed directly to the mortgage lender.
The CMHC says its is expecting “a large volume of applications,” and therefore to manage the volume is asking property owners to register on specific days once the application process has opened. Registration is broken down by province, more details on that can be found here. The deadline to apply for CECRA is August 31.
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