Prime Minister Trudeau announced this morning that the Federal Government has reached an agreement in principle with all provinces and territories to implement the Canada Emergency Commercial Rent Assistance (CECRA) for small businesses. Our DMCL comments are in the brackets.

• This program will lower rent by 75 per cent for small businesses that have been affected by COVID-19.  [What is a “small business”?  The 4^th bullet may provide some clues.]

• The program will provide forgivable loans to qualifying commercial property owners to cover 50 per cent of three monthly rent payments that are payable by eligible small business tenants who are experiencing financial hardship during April, May, and June.  [What is a “qualifying commercial property owner”?  The 3^rd bullet suggests that the owner must have a mortgage on the property to qualify. ]

• The loans will be forgiven if the mortgaged property owner agrees to reduce the eligible small business tenants’ rent by at least 75 per cent for the three corresponding months under a rent forgiveness agreement, which will include a term not to evict the tenant while the agreement is in place. The small business tenant would cover the remainder, up to 25 per cent of the rent.  [It appears that there must be a mortgage on the property for the property owner to be eligible.]

• Impacted small business tenants are businesses paying less than $50,000 per month in rent and who have temporarily ceased operations or have experienced at least a 70 per cent drop in pre-COVID-19 revenues. [Not clear if this defines “small business”, or just provides conditions that the small business must meet to qualify.]

• This support will also be available to non-profit and charitable organizations.

• The Canada Mortgage and Housing Corporation will administer and deliver the CECRA.

• It is expected that CECRA will be operational by mid-May, with commercial property owners lowering the rents of their small business tenants payable for the months of April and May, retroactively, and for June.

• Further details on CECRA will be shared in the near future once final terms and conditions are available.

• Under a rent forgiveness agreement, which includes a moratorium on eviction, the mortgaged commercial property owner would reduce the small business tenant’s monthly rent by at least 75 per cent. The tenant would be responsible for covering 25 per cent, the property owner 25 per cent, while the federal government and provinces would share the remaining 50 per cent. The forgivable loans would be disbursed directly to the mortgage lender.  [What if the property owner already made the April and May mortgage payments?  How will the lender treat the amounts received from the CMHC?  As a pre-payment of mortgage principal?  This doesn’t provide any immediate help to the landlord.  As a pre-payment of the owner’s July and August mortgage payments?]

Contact your DMCL advisor today to discuss the opportunities for you and your business.