Last week, the federal government provided more details regarding the Canada Emergency Commercial Rent Assistance (CECRA) program.
Canada Emergency Commercial Rent Assistance (CECRA)
- The program will be extended by one month through to the end of July 2020
- Additional information on the program as a whole, and the one month extension, was updated on the CECRA website
- Only those tenants approved in the April, May and June application are eligible for the July extension.
- If a business had an average revenue decline of 70% or more in April, May and June, they are deemed eligible for the additional month of rent relief. However, not all tenants in the original application need to be included for the July extension.
Calculating the 70% Reduction in Revenues
- There are two scenarios to calculate the 70% reduction in revenues:
- If your small business was operating during April to June 2019, then compare your gross revenues from April, May and June of 2020 to your revenues of April, May and June of 2019; and
- If your small business was not operating during April to June 2019, then compare your average gross revenues from April, May and June of 2020 to your average gross revenues for January and February 2020.
- Your revenue must consist of revenue earned from ordinary activities in Canada. Calculate your revenue using your normal accounting method and exclude revenues from non-recurring items.
- Your June forecast must be supportable by the variables at play for your business. The result is to be guided by the average revenue reduction for April and May and the forecasted change given your respective province or territory’s guiding principles for reopening the economy (i.e. where the impacted business falls in the staged approach).
For the One Month July Extension:
- Those who qualified for CECRA for small businesses based on existing program parameters will be able to apply for the additional one month based on having a 70% revenue decline for April, May and June (for example, without reassessing whether they continue to have a 70% revenue decline in July). Participation in the one month extension is voluntary. Both existing applicants to CECRA for small businesses and new applicants are able to apply for the July rent reduction.
Can I Submit Multiple Applications?
- Yes, a property owner can submit multiple applications, provided that each application is for a different property.
- For clarity, you can only apply for the program once per property. As a property owner, you must therefore ensure that you have included all eligible tenants in the respective application, prior to submitting your application.
Do I Have to Use the Sample Form of Rent Reduction Agreement?
- No, you don’t have to use the rent reduction agreement provided — but as the property owner of an impacted tenant, it’s your responsibility to ensure that:
- A rent reduction agreement is in place with any impacted tenant participating in the CECRA Program;
- The rent reduction agreement meets the CECRA Program requirements and the legal requirements of your jurisdiction; and
- That any legal advice that it considers necessary has been obtained
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.
Should you have any questions or feedback, please reach out to myself or the team. As always, we are here to help and support you.