The CECRA for small businesses application portal opens at 8:00 a.m. EST on May 25, 2020.
Canada Emergency Commercial Rent Assistance (CECRA) for small businesses provides relief for small businesses experiencing financial hardship due to COVID-19. It offers unsecured, forgivable loans to eligible commercial property owners to:
- reduce the rent owed by their impacted small business tenants
- meet operating expenses on commercial properties
Property owners must offer a minimum of a 75% rent reduction for the months of April, May and June 2020.
If you’re a commercial property owner and have small business tenants struggling to make their rent due to the pandemic, CECRA for small businesses is right for you. Applying for this program can help you and your tenants.
Your property depends on the success of your tenants
If your small business tenant declares bankruptcy and you have to evict:
- you will receive zero rental income
- you will continue to pay mortgage or debt costs on your property, including property tax, maintenance and other costs
- you’ll have to incur additional costs and go through a lengthy process — often between 6 to 18 months — to find new tenants
- you risk having to rent your space out at a lower cost post-pandemic
With CECRA for small businesses, you still collect a portion of your gross rent
For a business tenant paying $10,000 per month:
- CECRA for small businesses will cover 50% of the rent ($5,000).
- Your tenant will pay up to 25% of the rent ($2500).
- You forgive 25% of the rent ($2,500).
This means you get up to 75% of the rent or $7,500 of rent per month for April, May and June.
This adds up to $22,500 over the course of the program. It also provides your tenants breathing room to recover and remain viable post-crisis.
Your loan will be forgiven
CECRA for small businesses offers you a forgivable loan worth 50% of the value of your small business’ rent each month. The loans will be forgiven if you comply with all applicable program terms and conditions – including to not recover forgiven rent amounts when the program is over.
The application portal is opening on May 25, 2020.
We encourage all eligible commercial property owners to participate in this program.
As part of your application, you must provide rent reduction agreement(s) and landlord and tenant attestations. To help you prepare, we’ve outlined what information will be required and sample documents in the ‘what you need to apply’ section.
Taking a staggered approach
We expect a large volume of applications. To manage this volume and allow us to serve you better, we will be asking property owners to register on the following days once the application process has opened.
NOTE: Once registered, the portal will be available 24/7 for applicants to input data and upload documents.
|Day||Who should register?|
|Monday||Property owners who are located in Atlantic Canada, BC, Alberta and Quebec, with up to 10 tenants who are eligible for the program|
|Tuesday||Property owners who are located in Manitoba, Saskatchewan, Ontario and the Territories, with up to 10 tenants who are eligible for the program|
|Wednesday||All other property owners in Manitoba, Saskatchewan, Ontario and the Territories|
|Thursday||All other property owners in Atlantic Canada, BC, Alberta and Quebec|
CMHC has engaged MCAP and First Canadian Title (FCT) to deliver CECRA for small businesses. You may be contacted by either MCAP or FCT throughout the applicant validation and funding processes.
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.
Use these sample documents to help you prepare for the application process. The legal version of these application documents will be available in the portal when it opens at 8:00 a.m. EST on May 25, 2020.
- Tenant or Sub-tenant’s Attestation (sample PDF):
Property owners must have each of their eligible commercial small business tenants and/or subtenants sign an attestation. The Tenants are responsible for attesting to their eligibility with the program requirements.
- Property Owner’s Attestation (sample PDF):
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 (sample PDF): All application documents will be accessible on May 25, 2020.
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 (sample PDF):
Property owners must agree to the terms and conditions in the application and outlined in the forgivable loan agreement.
You’ll also need to provide the following information:
Property owner information
- 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, lease area and the monthly gross rent for the period of April, May and June 2020
To qualify for CECRA for small businesses, the commercial property owner must:
- own commercial real property* which is occupied by one or more impacted small business tenants
- enter (or have already entered) into a legally binding rent reduction agreement for the period of April, May and June 2020, reducing an impacted small business tenant’s rent by at least 75%
- ensure the rent reduction agreement with each impacted tenant includes:
- a moratorium on eviction for the period during which the property owner agrees to apply the loan proceeds, and
- a declaration of rental revenue included in the attestation
The commercial property owner is not and is not controlled by an individual holding federal or provincial political office.
CECRA will not apply to any federal-, provincial-, or municipal-owned properties, where the government is the landlord of the small business tenant.
- Where there is a long-term lease to a First Nation, or Indigenous organization or government, the First Nation or Indigenous organization or government is eligible for CECRA for small businesses as a property owner.
- Where there are long-term commercial leases with third parties to operate the property (for example, airports), the third party is eligible as the property owner.
- Also eligible are post-secondary institutions, hospitals, and pension funds, as well as crown corporations with limited appropriations designated as eligible under CECRA for small businesses.
NOTE: Small businesses that opened on or after March 1, 2020 are not eligible.
* We define commercial Real Property as a commercial property with small business tenants. Commercial properties with a residential component and multi-unit residential mixed-use properties would equally be eligible with respect to their small business tenants.
NOTE: Properties with or without a mortgage are eligible under CECRA for small businesses.
What is an impacted small business tenant?
Impacted small business tenants are businesses — including non-profit and charitable organizations — that:
- pay no more than $50,000 in monthly gross rent per location (as defined by a valid and enforceable lease agreement)
- generate no more than $20 million in gross annual revenues, calculated on a consolidated basis (at the ultimate parent level)
- have experienced at least a 70% decline in pre-COVID-19 revenues **
NOTE: Eligible small business tenants who are in sub-tenancy arrangements are also eligible, if these lease structures meet program criteria.
** Small businesses can compare revenues in April, May and June of 2020 to that of the same period in 2019 to measure revenue losses. They can also use an average of their revenues earned in January and February of 2020.
CMHC administers CECRA for small businesses on behalf of the Government of Canada and our provincial and territorial partners.
The program offers assistance for the months of April, May and June 2020.
- Property owners can apply later and the program will be applied retroactively.
- Property owners may still apply for assistance once the 3-month period has ended if they can prove eligibility during those months. The end date for applications is August 31, 2020.
- Property owners must use the funds from CECRA to refund amounts in excess of 25% paid by the small business tenant for the period or at the option of the impacted tenant apply rent paid in excess of 25% to future rent owing by the impacted tenant. ***
*** If rent has been collected at the time of approval, a credit to the tenant for a future month’s rent (i.e. July for April) is acceptable — if the tenant chooses this option. This can be a flexible 3-month period.
The deadline to apply is August 31, 2020.
CMHC will provide forgivable loans to eligible commercial property owners. Funds will be transferred to the property owner’s financial institution.
- The loans will cover up to 50% of the monthly gross rent owed by impacted small business tenants during the 3-month period of April, May and June 2020.
- The property owner will be responsible for no less than half of the remaining 50% of the monthly gross rent payments (paying no less than 25% of the total).
- The small business tenant will be responsible for no more than half of the remaining 50% of the monthly gross rent payments (paying no more than 25% of the total).
Note: If you are a tenant and struggling to pay the remaining portion of your rent, alternate programs are available to assist you.
CECRA for small businesses loans will be forgiven if the property owner complies with all applicable program terms and conditions — including to not recover forgiven rent amounts when the program is over.
Why should I apply?
There are several reasons that applying for this program could be beneficial for you:
- CECRA for small businesses loans will be forgiven if you comply with all applicable program terms and conditions — including to not recover forgiven rent amounts from your impacted tenants when the program is over.
- CECRA for small businesses ensures that you get a minimum of 50% of your rent covering April, May and June of 2020
- The eviction and new rental process is expensive and those funds affect your profits.
Are there any rules on how I can use these funds?
Yes, in order of priority, you can use the funds for:
- reimbursing impacted tenants for any rent paid above 25% during the eligible period unless the tenant choses to apply the previously paid rent against future rent
- any costs and expenses relating directly to the property, including any financing held by the property owner operation and maintenance and repair obligations (such as costs of common area maintenance, property taxes, insurance and utilities)
When will my loan be forgiven?
This interest free loan will be forgiven on December 31, 2020. To ensure loan forgiveness, you must follow the terms and conditions of the loan, including:
- complying with the Rent Reduction Agreement
- ensuring that your attestation and application (including supporting documentation) is accurate and truthful
- If you file for bankruptcy, restructure, reorganize or dissolve your business, you will need to pay back this loan.
- In the event of default, CMHC has full recourse to recover the CECRA funding from you (the property owner).
How is the $20M gross annual revenue threshold calculated and what is the ‘ultimate parent’?
Gross annual revenues are calculated based on your small business tenant’s 2019 financial revenue. Your small business tenant would use whatever 12-month period their company used to calculate its financials.
If the small business tenant or its ultimate owner produces consolidated statements, then the tenant would use revenues reported for the group level of companies.
Alternatively, if the small business tenant does not produce consolidated statements, then it is the specific revenue of the tenant that applies for the $20 million test.
What is included in monthly gross rent?
Monthly gross rent is the total gross rent amount payable by the small business tenant as set out under a valid and enforceable lease agreement. Please see table below for inclusions/exclusions:
Included in Gross Rent
- Net rent / minimum rent / base rent (in a net lease)
- Regular monthly installments of operating costs (in a net lease)
- Regular monthly installments of property taxes payable to the landlord (in a net lease)
- Regular monthly installments of other additional rent amounts payable to the landlord — for example: maintenance costs, repairs, utilities, management fees, etc. (in a net lease)
- Gross rent (in a gross lease)
- Percentage of sales rent paid (if included in the lease arrangement)
Excluded from Gross Rent
- Indemnity payments
- Payments arising due to tenant default / landlord enforcement
- Payments arising due to landlord exercise of self-help remedies
- Interest and penalties on unpaid amounts
- Fees payable for discrete items or special services (for example: fees to landlord for reviewing plans, supervising work, considering requests for consent, performing exceptional tasks at tenant’s request)
- Reconciliation adjustment payments
- Amounts required under the lease agreement to be paid separately by the tenant to 3rd parties (for example: property taxes, utilities, insurers)
- Costs of non-monetary obligations (e.g., repairs and maintenance)
- Insurance proceeds or proceeds from other rent subsidy programs
Note: applying for insurance coverage does not remove you from being eligible for the program, but it may adjust the amounts received if you successfully receive payments from insurance claims or other programs to cover rent
As the Property Owner, am I eligible if I have no declared rental income for 2018 and/or 2019 because my property is new?
Yes, where the property is newly constructed or recently purchased, you may be still eligible for CECRA for small business, provided the other program requirements are met. This includes having entered into a lease with the eligible tenant on or before April 1, 2020.
What if one of my tenants cannot make the 25% contribution?
CECRA for small businesses offers commercial property owners a forgivable loan of 50% of impacted tenant rent during these difficult and uncertain economic times.
The Government of Canada offers other programs that may be available to assist tenants who struggle to pay the remaining portion of their rent. Landlords may provide rent forgiveness above the minimum 25% as well or defer payment of the 25%.
As a property owner, do I need to provide a declaration for each tenant included in my application?
Yes. Property owners will need to obtain an attestation for each impacted tenant asking for help.
We aren’t in June yet — should I wait to apply? If I do apply now, will I need to re-apply so that each of my tenant(s) can provide an attestation for June?
No, you must apply for all 3 months at the same time and all impacted tenants must be included on a single application.
Your tenant can use forecasts for the month of June. The eligibility on the 70% factor will be determined on the average of April, May and then, forecasting June revenues.
I am a property owner and my small business is the only tenant, can I apply?
CECRA for small businesses is applicable to commercial property owners with a valid and enforceable lease agreement with an impacted small business tenant.
- Landlords and tenants who are not at arm’s length will be included in the program as long as there was a valid and enforceable lease agreement in place and the rent under the lease is at market rates.
- All general program requirements apply. This includes confirmation that you have declared rental revenue in your attestation.
How do you define commercial Real Property?
We define commercial real property as a commercial property with small business tenants.
Commercial properties with a residential component and multi-unit residential mixed-use properties would equally be eligible with respect to their small business tenants.
I am a small business tenant and I have paid my rent for April and May. How can I be sure that my property owner will forward the CECRA for small businesses funding to me?
The loan agreement stipulates that if you have already paid the April, May and June rent your property owner will either, at your choice:
- reimburse you for rent paid in excess of 25%, or
- provide you a credit for future rental payments
What are my options if my property owner does not apply for the program?
The federal government and provincial and territorial governments are urging property owners to provide flexibility to tenants facing hardship in this uncertain time.
The Government of Canada is taking immediate, significant and decisive action to support Canadians and businesses facing hardship resulting from the global COVID-19 outbreak. CECRA for small businesses is part of these efforts.
For example, the Canada Emergency Business Account (CEBA) supports businesses in meeting their needs to pay for non-deferrable costs during the current period of shut down.
Business owners may also be eligible for other credit support programs, such as:
- funding supported through the EDC Loan Guarantee for Small and Medium-Sized Enterprises (SMEs)
- the BDC Co-Lending Program for SMEs
Employers may also be able to take advantage of other measures the government has put in place including deferring GST/HST payments and income taxes.
Learn more about these measures at Canada’s COVID-19 Economic Response Plan.
The government will continue to do whatever it takes to support Canadians and the economy during this unprecedented global pandemic.
Can my property owner apply for all of their tenants at once?
Yes, your property owner can apply for all impacted tenants at once.
If I need to attest to a 70% drop for 3 months, does my landlord need to wait until the end of June to apply?
Your landlord must apply for all 3 months at the same time.
Your eligibility on the 70% factor will be determined on the average of April, May and then, forecasting June revenues.
Can my property owner ask me to pay back the rent at a later date, after the program has ended?
Your property owner must agree that the rent that is forgiven, reduced and will never be recoverable, collection through significant or disproportionate rent increases. This will also be within the terms of the rent reduction agreement in place between you and your property owner.
NOTE: If you provide any false or misleading information in your attestation, you will be responsible for all rent forgiven under the terms of your lease.
My property owner doesn’t have a mortgage — would we still be eligible for the program?
Yes. CECRA for small businesses is available to property owners who do not hold a mortgage.
I have multiple retail locations and multiple landlords, how would CECRA for small businesses work in this situation?
In this situation, each property owner would apply for the program. This means that you need to work with each of your respective property owners who are interested in applying for CECRA for small businesses.
How do you calculate the 70% reduction in revenues?
If you are a small business, you can calculate your revenue loss by:
- comparing your gross revenues from April, May and June of 2020 to your revenues of April, May and June of 2019, or alternatively
- compared to average gross revenues for January and February 2020
NOTE: Your revenue must consist of revenue earned from ordinary activities in Canada. Calculate your revenue using your normal accounting method and exclude revenues from extraordinary items.
For registered charities and non-profit organizations, the calculation would include most forms of revenue, excluding revenues from non-arm’s length persons. These organizations would then be allowed to choose to include revenue from government sources as part of the calculation.
Will the program extend beyond June if public health measures remain in effect?
CECRA for small businesses is part of the Government of Canada’s COVID-19 Economic Response Plan.
The government continues to assess and respond to the impacts of COVID-19. It stands ready to take additional actions — including CECRA for small businesses — as needed to stabilize the economy and mitigate the impacts of the pandemic.
Any potential additional actions taken under CECRA for small businesses will be developed in consultation with provincial and territorial governments.