On April 16, 2020, the Federal government announced the Canada Emergency Commercial Rent Assistance Program (CECRA) but could not provide further details because discussions with the provinces and territories were required for the administration and implementation of the program.
Today, the Ontario government announced the Ontario-Canada Emergency Commercial Rent Assistance Program (OCECRA) and provided further details on the eligibility requirements and the terms of the forgiveable loan. The OCECRA is expected to be operational in mid-May 2020, and will provide commercial rent relief for the months of April and May (retroactively) and June 2020.
We summarize the OCECRA as follows:
Ontario-Canada Emergency Commercial Rent Assistance Program – Updated May 7, 2020
What is the purpose of OCECRA?
To provide relief to landlords and small business tenants affected by COVID-19 by providing forgivable loans to landlords to cover 50% of the gross monthly rent for April, May and June 2020.
Who is eligible?
The Landlord must: (a) be the registered owner of a commercial property that has small business tenants affected by COVID-19; (b) declared rental income on their tax return (personal or corporate) in 2018 and/or 2019; (c) enter into a rent forgiveness agreement to reduce the tenant’s monthly rent by at least 75 percent of the gross monthly rent payable under the lease agreement for three months, and agree to not evict the tenant for three months; and (d) have a mortgage loan secured by the commercial property, although there will be alternatives available to apply the relief.
The small business tenant must: (a) have a gross monthly rent of less than $50,000 (as defined by a valid and enforceable lease agreement); (b) generate less than $20 million in gross annual revenue; (c) have temporarily closed, or experienced a decrease in revenue of at least 70 percent (compared to the same month in April, May or June 2019, or compared to average revenues in January and February 2020); and (d) not fall under some limited exclusions.
Not-for-profit and charitable organizations may also be eligible.
What is the amount of the forgiveable loan?
OCECRA is a cost-sharing program between landlords, small business tenants and the federal and provincial governments. The landlord and small business tenant each agree to pay 25 percent of the gross monthly rent for three months. The federal and provincial governments will provide a forgiveable loan for the remaining 50 percent of the gross monthly rent for three months.
How to apply?
The Canada Mortgage and Housing Corporation (CMHC) will administer the program. Further details are found here but the program is still being finalized. The landlord may apply for OCECRA but it is not mandatory. If the landlord does not have a mortgage secured by a commercial property, then the loan funds may be applied against other debt facilities or fixed cost payment obligations.
Our lawyers have expertise and experience in commercial lease matters and can assist you in resolving your legal issues in a timely and cost-effective manner. Please contact us for an initial consultation through our Request Consultation Form, email to info@gilbertsondavis.com or by telephone (416) 979-2020.
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