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The Canada Emergency Commercial Rent Assistance program: COVID-19 economic response

Brian Tabor, QC, Ryan Baker, and Madeleine Coats

On April 16, 2020, Prime Minister Justin Trudeau announced the beginning of a new piece to the COVID-19 federal economic response package – this time, in the form of the Canada Emergency Commercial Rent Assistance program (CECRA). Finance Minister Bill Morneau announced that the government would offer forgivable loans to commercial property owners who offer their impacted small business tenants reductions in their rent.

On May 19, 2020, the Canada Mortgage and Housing Corporation (CMHC), the entity responsible for the overarching administration of CECRA, provided further information regarding the program at the federal level. The program is set to be effective for April, May, and June. As this program is designed to be a joint effort with provincial governments, some changes may come with respect to province-specific implementation. A review of each of the Atlantic province’s similar programming already established is included below.

Information from the CMHC can be found here.

Canada Emergency Commercial Rent Assistance

The CECRA was announced to offset the difficulties faced by businesses in commercial tenancies during the COVID-19 pandemic. Rent support has been a topic of conversation since the outset of the COVID-19 pandemic, and this program seeks to fill a current gap in the otherwise widespread economic response from our various levels of government.

This program will provide loans, some of which may be forgivable, to commercial property owners who reduce the rent payable by impacted small business tenants for the months of April, May, and June 2020.

The application portal opened on May, 25, 2020, and will remain open until the program deadline of August 31, 2020. This program can be applied retroactively, either with repayments to tenants, or as credit for rents being applied to later rent payments if agreed to by both parties.


To be eligible for the program, property owners must:

  • Own commercial real property where an impacted small business tenant is located;
  • Have lease agreements in place since at least April 1, 2020, with impacted small business tenants;
  • Have entered / will enter a rent reduction agreement for April, May, and June 2020, where the rent reduction agreement 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 as to eligibility to be given by the commercial property owner (see the Application Details section below).

Federal, provincial, or municipal government property owners are excluded from the program, with the exception of some long-term commercial leases where third parties operate the property. Properties with or without a mortgage are eligible for CECRA.

To be eligible for the program, impacted small business tenants must:

  • Have opened before March 1, 2020;
  • Pay no more than $50,000/month in gross rent (as defined in a valid and enforceable lease);
  • Generate no more than $20 million in gross annual revenue (calculated at the parent level, on a consolidated basis); and
  • Have experienced a 70% decline in revenues as compared to the same month of revenue in 2019 or based on an average of revenues earned in January and February 2020 (forecasts may be used for June 2020 in the event applications occur before month-end).

A 70% decline in revenues is the decline as averaged over April, May, and June. If property owners apply to the program prior to the end of June, they must use a forecast of revenues in June as part of this calculation.

If lease structures match eligibility requirements, sub-tenant small businesses are eligible for CECRA. If the tenant is a charity or non-profit, the revenue calculation in the last bullet, above, can include income from non-arm’s length persons, as well as revenue from government sources. Revenue must be earned from ordinary activities in Canada – tenants must use their normal accounting methods and exclude any “extraordinary items”.

Non-arm’s length tenants and commercial property owners are eligible for CECRA if there has been a valid and enforceable lease agreement in place since at least April 1, 2020, on no greater than market terms.

Application details

Each commercial property owner that intends to apply for CECRA will need to submit the following documents:

  • Attestation of eligibility from each impacted small business tenant (or sub-tenant), a sample of which can be found here;
  • Property owner attestation of eligibility, a sample of which can be found here;
  • Rent reduction agreement, a sample of which can be found here;
  • Forgivable loan agreement, a sample of which can be found here; and
  • Various information in respect of each impacted small business tenant and the applicable properties, including:
  • Property address, type, property tax statement, latest rent roll for each property, and the number of commercial units;
  • Banking information for the commercial property owner (including a bank statement), contact information, co-ownership information (if any) and contact details for any co-owners; and
  • Tenant contact information, registered business name, leased area details, and monthly gross rent for April, May, and June 2020.

As mentioned above, the application portal will open May 25, 2020 at 8:00am EST. The deadline to apply is August 31, 2020. Property owners must apply for all impacted tenants at once, and must apply for all three (3) months at once. The program cannot apply for only portions of the period.

Initial registration will happen based on region and property owner size: property owners in Atlantic Canada (or BC, Alberta, or Quebec) with up to 10 tenants may apply on Day 1. Property owners in Atlantic Canada with more than 10 eligible tenants may apply on Day 4. On Day 5, the portal can be accessed by any applicant at any time.

Loan forgiveness structure

Forgivable loans for property owners will cover:

  • 50% of gross rent owed by impacted small business tenants during April, May, and June; if the property owner is responsible for no less than half of the remaining 50% (i.e. a minimum of 25% of the total).
  • The small business tenant will be responsible for the remaining (no more than) 25% of gross rent for April, May, and June.

The money advanced can be used for two purposes: first (and primarily) as a reimbursement to the impacted tenant for any rent paid above the 25% maximum tenant contribution during the eligible period, unless it is being applied to future rent as a credit; and second (if agreed to) toward costs and expenses relating directly to the property, such as financing held by the property owner for the property’s operation, maintenance, and repair obligations (such as the costs of common area maintenance, property taxes, insurance, and utilities).

The loans to property owners will be forgiven on December 31, 2020, if the rent reduction agreement is complied with, and the attestations and application are complete, accurate, and truthful. In the event of property owner default or bankruptcy, restructuring, reorganization, or dissolution, the loan must be repaid in full. Rent abatements or alterations to the lease agreement cannot be recouped or recovered at a later date; this would run afoul of the program requirements and result in the commercial property owner being responsible for the entire amount of the loan. Further, disproportionate rent increases cannot be imposed on the tenants in an attempt to recover the lost, reduced, or foregone rent.

If a small business tenant has provided false or misleading information in their attestation, they will be responsible for all rent forgiven or reduced under the terms of the lease and the Rent Reduction Agreement.

Impacted small business tenants are encouraged to pursue other economic aid avenues provided by the federal government if they believe they are unable to meet the 25% maximum rent payment, or in the event their landlord does not participate in the program.

In summary: what this means for you

CECRA provides a possible avenue as a commercial property owner to recover some rent from the federal government on behalf of impacted small business tenants. However, eligibility and suitability to the program will require a detailed review of relevant lease agreements, possible challenges to collecting tenant information, and potential financial implications in the long-run. Consider consulting with legal counsel prior to making commitments to tenants with respect to the program.

CECRA is opt-in, allowing property owners to consider their options before moving ahead with an application. For many, it will make financial sense to rely on this program where tenants may already be facing challenges. It is important to note that this is a commercial property owner-driven program: impacted small business tenants may communicate their interest in the program, but the commercial property owner (as landlord) has the sole discretion as to whether or not it wants to opt in to the program.

The program may be extended beyond June 2020, should the public health crisis continue. For commercial property owners who do not qualify for this program, the federal government has indicated that rent relief for larger businesses may be on the way. We will keep apprised of updates and amend this post as required.

Provincial government programs

New Brunswick

Currently, New Brunswick has not established out a provincial rent deferral or subsidy program.

Newfoundland and Labrador

Currently, Newfoundland and Labrador has not established out a provincial rent deferral or subsidy program.

Nova Scotia

In Nova Scotia, the Commercial Rent Deferral Support Program is a provincial-level program providing a government-backed guarantee for rent deferrals by commercial landlords. Please see our client update on the program for more information here. The provincial government has not provided guidance with respect to whether the two programs are mutually exclusive. More information may follow in this respect, but given that rent reduction is a condition to CECRA and the provincial program guarantees deferred rent, it is hard to envision the two programs working in unison for landlords and tenants.

The deadline to apply for the NS Commercial Rent Deferral Support Program has passed. The Nova Scotia government prohibited landlords from exercising self-help remedies as they relate to evictions during April, May, and June.

Prince Edward Island

Prince Edward Island implemented a similar program to that of Nova Scotia, the Commercial Lease Rent Deferral Program, which is a provincial-level program providing a government-backed guarantee program for rent deferrals by commercial landlords. Official guidelines for the program can be found here.

The deadline to apply for the PEI Commercial Lease Rent Deferral Program has passed.

This update is intended for general information only. If you have questions about the above, please contact a member of our Commercial Transactions / Agreements group.

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