The Benefits, Eligibility, and Application Process for CECRA Explained
Are you having difficulty paying your commercial rent? You may qualify for the Canadian Emergency Commercial Rent Assistance (CECRA). Here is CECRA explained, as well as information on who is eligible and how to apply.
CECRA is a loan program designed to provide rent assistance to commercial property owners who are willing to reduce rent payments for their small business tenants. Eligible property owners will soon be able to apply for assistance and can sign up to receive more details when they are available.
What does CECRA do and what benefits does it offer?
CECRA (Canada Emergency Commercial Rent Assistance) is a government-funded loan program for commercial property owners whose tenants are experiencing financial hardship during the COVID-19 crisis. This program offers loans to owners of commercial property, allowing them to greatly reduce the rent owed to them by the small business tenants of their properties, provided they meet certain conditions. CECRA will cover 50% of the rent owed by small business tenants during the months of April, May, and June 2020, and the loan can be applied retroactively.
CECRA loans are forgivable if the owner agrees to reduce tenant rent by 75% for these three months and follow all eligibility requirements found below. Commercial property owners will also be able to apply for retroactive assistance once the three-month period is over.
Who is eligible for CECRA?
To be eligible for CECRA, a property owner must own commercial property located in Canada and said property must be occupied by at least one impacted small business tenant. An owner must be generating rental revenue from said property, must have a commercial mortgage loan at this time, and must have reported rental income on a tax return during the years of 2018 and/or 2019.
For the months of April, May, and June, a commercial property owner will need a moratorium against evictions and must agree to be responsible for no less than 25% of the gross rent payments. The tenants will thus be held responsible for no more than 25% of the gross rent payments. Owners must refund rent payments made over that amount during the three-month period, though credits given to tenants for future rent payments are acceptable if both parties agree.
Impacted small business tenants are defined as those who pay less than $50,000 per month for a rental location, have suffered at least a 70% decline in income due to the COVID-19 crisis, and make less than $20 million in consolidated revenue per year.
How should a business apply for CECRA?
The application portal is opening on May 25, 2020, but commercial property owners can sign up here to receive information on how to apply when it goes live. The deadline for applying is August 31, 2020.
This article is provided by E&E Ltd. We are professional accountants who are here to assist small businesses with accurate information during the COVID-19 crisis and beyond. If you or your business have any questions, be sure to contact us today.