Applications for Canada Emergency Commercial Rent Assistance

Sep 14, 2020

Dear Valued Clients,

Please note that some details below have been revised with respect to the CECRA Eligibility Details. Thank you.

Applications are now being accepted for the Canada Emergency Commercial Rent Assistance (CECRA) through the Canada Mortgage and Housing Corporation (CMHC).

The Government of Canada is urging all commercial property owners to apply in order to facilitate the success of their tenants to avoid circumstances such as receiving zero rental income, incurring increased costs, and potentially having to find new tenants during these uncertain times.

Eligibility Details

This program is designed to provide financial relief for small business tenants that are paying less than $50,000 per month in gross rent, with annual consolidated revenues of less than $20 million, and have experienced a drop of at least 70% in pre-COVID-19 revenues.

It is also available to non-profit and charitable organizations. Although government offices along with small businesses that opened on or after March 1, 2020 are not eligible.

To be eligible for CECRA, you must:

Own commercial real property which is occupied by one or more impacted small business tenants which also applies to commercial properties with a residential component and multi- unit residential mixed-use properties;
Enter, or have already entered, into a legally binding rent reduction agreement which includes reducing an impacted small business tenant’s rent by at least 75% for April, May and June 2020;

Freeze evictions for the period during which you, the property owner, agrees to apply the loan proceeds;
Provide a declaration of rental revenue included in the attestation.

Small businesses can compare revenues in April, May, and June of 2020 to the same months in 2019, or use an average of their revenues earned in January and February of 2020, similar to the calculations used for the Canada Emergency Wage Subsidy (CEWS).


Application Process

To manage the anticipated volume of applications, the CMHC is staggering the intake based on the size and location of the commercial property:

Monday, May 25: Property owners who are located in Atlantic Canada, British Columbia, Alberta, and Quebec, with up to 10 tenants who are eligible for the program;
Tuesday, May 26: Property owners who are located in Manitoba, Saskatchewan, Ontario, and the Territories, with up to 10 tenants who are eligible for the program;

Wednesday, May 27: All other property owners in Manitoba, Saskatchewan, Ontario, and the Territories;
Thursday, May 28: All other property owners in Atlantic Canada, British Columbia, Alberta, and Quebec;

Friday, May 29: All property owners across Canada.

Property owners have up until August 31, 2020 to apply for assistance for the months of April, May, and June 2020. Landlords must apply for all 3 months at the same time, and all impacted tenants should be on a single application. If deemed eligible, the funding for the landlord will be retroactive for those months.

To begin the process, you must register and create an account, then complete the application and upload your supporting documents by visiting: https://cecra-apply.ca/account/login?ReturnUrl=/

Application Requirements

Property owners will need to provide information in support of their application, sign an attestation, and agree to the terms and conditions of the loan agreement in order to be eligible for the program.

Tenant or Sub-Tenant’s Attestation : Property owners must have each of their eligible commercial small business tenants and/or sub-tenants sign an attestation. Tenants are responsible for attesting to their eligibility with the program requirements.

Property Owner’s Attestation: Property owners must sign an attestation confirming the information relating to the property owner and the property provided in the application is correct and attest to their eligibility with the program requirements.

Rent Reduction Agreement: Property owners must enter into a legally binding rent reduction agreement with each impacted tenant to confirm the rent reduction in accordance with the program terms and conditions. This agreement is conditional upon final approval of the application for CECRA for small businesses.

Forgivable Loan Agreement: Property owners must agree to the terms and conditions in the application and outlined in the forgivable loan agreement.

Property Information: Includes property address, property type, property tax statement, latest rent roll for each property, and the number of commercial units.

Applicant Information: Includes banking information (including bank statement), property owner contact information, co-ownership information, and contact details for co-owners.

Tenant Information: Includes tenant contact information, registered business name, number of employees, consolidated revenues, lease area, and the monthly gross rent for the period of April, May, and June 2020.

Additional Information

Properties with or without a mortgage are eligible under CECRA for small businesses. If your business is eligible, the funds received can be used for reimbursing impacted tenants for any rent paid above 25% during the period, and otherwise be used any costs and expenses related directly to the property.

As long as a valid lease agreement exists with market rates, non-arms length landlords and tenants will be included in the program. Attempting to recover forgiven rent amounts when the program is over will not be permitted.

CECRA will cover 50% of the rent for eligible small businesses. In turn, your tenant will pay up to 25% of the rent. As the landlord, you will forgive the remaining 25% of the rent for your tenants.

As long as you comply with all the terms and conditions of the program, CECRA will offer a forgivable loan worth 50% of the value of your small business’ rent for April, May, June 2020. The interest-free loan will be forgiven on December 31, 2020.

If you file for bankruptcy, restructure, reorganize, or dissolve your business, this loan will need to be repaid. In the event of default, CMHC has full recourse to recover the CECRA funding from you, the property owner.

The Canada Housing and Mortgage Corporation (CMHC) is administering this program and MCAP and First Canadian Title (FCT) have been engaged to distribute CECRA. Throughout the validation and funding processes, you may be contacted by either MCAP or FCT. Funds will be delivered directly to your mortgage lender.

For more details regarding CECRA, please visit theCMHC website.

This newsletter and the details provided are solely shared for informational purposes and does not constitute legal, tax, or financial advice or opinions. Please do not hesitate to contact your manager for assistance.

Sincerely,

Pramen Prasad CPA, CA, CMA Managing Partner
Prasad & Company LLP

If you have any questions, you can reach us at:

(416) 226-9840 or
1 - (888) 550-8227