Applications for the federal government’s new Canada Emergency Commercial Rent Assistance (CECRA) program opens on Monday and requires buy-in from both the tenant and landlord.
The government hopes a joint effort between federal lenders, small businesses, and commercial landlords can help tenants stay in the retail and office spaces they rent. In turn, it could protect jobs and help the economy bounce back more quickly after the pandemic, the government said in a news release.
Daily Hive has prepared a handy guide on everything you need to know about the new program.
What is it?
The CECRA is a government program that provides forgivable loans to landlords if they reduce rent by at least 75% for their commercial tenants.
The federal loan will cover half of the rent each month, and the tenant is supposed to pay a quarter of their usual rent. The landlord will not collect the remaining quarter and will shoulder that cost themselves.
The program offers assistance for April, May, and June rent.
Where do I apply?
The program is administered by the Canada Mortgage and Housing Corporation, and applications open on Monday, May 25. You can sign up for an alert email from CMHC when they open.
Application dates are staggered by province throughout the week so the system doesn’t get overloaded.
Wondering if you’re eligible for the Canada Emergency Commercial Rent (#CECRA) for small businesses program? Learn more about who qualifies & when you can apply: https://t.co/dTJ5fHUwAY pic.twitter.com/7UZVKLIjAZ
— CMHC (@CMHC_ca) May 21, 2020
Who is eligible?
The program is available to any small business, non-profit, or charity that pays no more than $50,000 per month in rent for each of its locations, generates less than $20 million in gross annual revenues, and has experienced at least a 70% decline in revenue since the COVID-19 pandemic.
Businesses that opened in the last three months (on or after March 1, 2020) are not eligible.
Why should landlords participate?
CMHC, which administers the program, encourages landlords to participate because they could have trouble finding new tenants willing to pay the same price for their space post-pandemic.
Even though landlords will have to cover a quarter of the usual rent themselves, CMHC says going through the program is a good idea because they’ll avoid the hassle of evicting a tenant and possibly having their property vacant for several weeks or months.
“We thank and commend the many property owners who have already taken action to help their tenants during this crisis,” Finance Minister Bill Morneau said in a news release Wednesday.
The loans won’t have to be paid back if the landlord meets certain conditions, including not recovering any additional rent from the tenant after the program is over.
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What documents need to be prepared before applying?
CMHC has provided sample templates so applicants can get the relevant information ready. Tenants and landlords will have to fill out the following during the application process:
- A statement from the tenant
- A statement from the landlord
- A rent reduction agreement of at least 75%, which includes a moratorium on eviction while the program is in place
- A forgivable loan agreement
CMHC also needs property information including its address, a property tax statement, the number of commercial units on it, and the latest rent roll for each property.
Property owners will also need to provide their contact details, information about co-owners, and a bank statement.
Tenants need to provide their contact information, their registered business name, the lease area, and their monthly gross rent for April, May, and June.
What if I have questions about the process?
CMHC will have specialists available to answer questions through the portal starting on May 25 at 8 am ET.