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Prime Minister Justin Trudeau

Small and mid-sized businesses hard hit by COVID-19 offered rent reduction program

Friday, April 24, 2020 @ 1:37 PM | By Cristin Schmitz


Prime Minister Justin Trudeau says COVID-19-affected small and medium-sized businesses will benefit from a new program expected to be up and running in mid-May that will give them access to rent reductions of 75 per cent for April, May and June.

On April 24, the prime minister announced the creation of the Canada Emergency Commercial Rent Assistance (CECRA) program for businesses, charities and non-profits, which pay monthly rent of $50,000 or less, and who have temporarily ceased operations, or have experienced at least a 70-per-cent drop, in their pre-COVID-19 revenues.

Prime Minister Justin Trudeau

Trudeau told reporters at his daily COVID-19 briefing that the new program, whose costs will be shared with the provinces, will apply to rents for April, May and June. He left the door open to CECRA continuing beyond that.

He also pledged that the federal government will have news in a similar vein “very soon” for larger corporations.

“We know that this is an extremely difficult crisis and that small businesses have been hit hard by this, including restaurants and other businesses that have had to shut down completely because of COVID-19,” Trudeau said in French. “We recognize that even with the [federal government] wage subsidy, fixed costs for these businesses are a real challenge. That’s why we will be covering 75 per cent of their rent for April, May and June, and we’ll see afterwards what’s necessary for those businesses that are hardest hit by COVID-19.”

Trudeau noted as well that he and the premiers of the provinces and territories are continuing to discuss the eventual reopening of the economy, which will “have to happen gradually” — and in line with the specific circumstances in each jurisdiction — in order to ensure that the progress achieved so far in combating COVID-19 is not lost.

The prime minister said there will be “significant co-ordination” at the federal level, and that governments are working on principles and recommendations that will ensure the safety of Canadians.

In its April 24 press release announcing CECRA, the government said it will offer forgivable loans to “qualifying” commercial property owners to cover 50 per cent of three monthly rent payments payable by eligible small business tenants, who are experiencing financial hardship, during April, May and June.

Those 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. The property owner would be responsible for covering 25 per cent, while the other 50 per cent would be shared by the federal government and provinces (with the provinces paying one-quarter and Ottawa paying three-quarters).

The forgivable loans would be disbursed directly to the mortgage lender.

The government said commercial property owners would lower the rents of their small business tenants that are payable for April and May, retroactively, and for June. “The federal government and provincial and territorial governments urge property owners to provide flexibility to tenants facing hardship in this uncertain time,” the news release says. “Further details on CECRA will be shared in the near future once final terms and conditions are available.”

The Canada Mortgage and Housing Corporation (CMHC) will administer and deliver the CECRA, which is a joint effort between the federal government, and the provincial and territorial governments constitutionally responsible for property owner-tenant relationships.

If you have any information, story ideas or news tips foThe Lawyer’s Daily please contact Cristin Schmitz at Cristin.Schmitz@lexisnexis.ca or at 613-820-2794.