Canada introduces rent relief for small businesses

The Government of Canada and all provincial and territorial governments have taken action to protect Canadians and businesses from the impacts of the COVID-19 pandemic, which has led to the introduction of the Canada Emergency Commercial Rent Assistance (CECRA) for small businesses. The official press release can be found here.

What rent assistance is the government providing?

On April 24 the federal government, in agreement with all provinces and territories, introduced the CECRA. This rent assistance is intended for small commercial businesses. 

This program is intended to lower rent by 75% for small businesses that have been strongly affected by COVID-19 during April, May, and June 2020.

To be eligible, small business tenants must: (i) be paying $50,000 or less in monthly rent, and (ii) have experienced at least a 70% drop in pre-COVID-19 revenues or have temporarily ceased operations. 

This support is also available to non-profit and charitable organizations.

Under the program, forgivable loans will be provided to qualifying commercial property owners to cover 50% of the three monthly rent payments payable by eligible small business tenants. For such loans to be forgiven, the property owner must agree: (i) to reduce the eligible small business tenant’s rent by at least 75% for the three corresponding months under a rent forgiveness agreement, and (ii) not to evict the tenant while such agreement is in place. This program can be broken down as follows, as applicable to a monthly rent payment:

By way of example: if rent is $100 per month, the eligible commercial property owner will receive $50 through the federal government’s forgivable loan program, $25 from the eligible small business tenant, and the landlord will be responsible for the remaining $25. 

Eligible small businesses also have access to the government-guaranteed loan to a maximum of $40,000 to offset any additional hardship. 

Certain provinces and territories may also be providing additional grants to assist eligible small businesses with monthly rent assistance. 

In the upcoming days the federal government intends to make an announcement on commercial rent assistance for larger commercial businesses (with rents of $50,000 or more per month). 

For information about other available government relief programs, refer to our guide.