Canada Emergency Commercial Rent Assistance Program
On Friday April 24, 2020, the Federal Government and Prime Minister Justin Trudeau announced more information relating to the Canada Emergency Commercial Rent Assistance Program. This Federal assistance is expected to lower rent by 75% for affected small businesses. This assistance is to be provided in partnership with the provinces and territories, which have jurisdiction over rents.
The Canada Emergency Commercial Rent Assistance for small businesses will provide forgivable loans to qualifying commercial property owners to cover 50% of three monthly rent payments payable by eligible small business tenants experiencing financial hardship during April, May and June. Provinces and territories have agreed to cost share total costs and ensure implementation of the program. They will cover up to 25% of costs, subject to terms of agreements with Ottawa.
The remaining 25% of the 75% reduction will be covered by the commercial landlord. The loans provided by Canada Emergency Commercial Rent Assistance program will be forgiven if the mortgaged property owner agrees to reduce the eligible small business tenants’ rent by at least 75% for the three corresponding months under a rent forgiveness agreement, which will include a pledge not to evict the tenant while the agreement is in place.
The small business tenant would cover the remainder, up to 25% of the rent.
Small businesses are eligible for this support if they are those paying less than $50,000 per month in rent and who have temporarily ceased operations or have experienced at least a 70% drop in pre-Covid-19 revenues. This benefit will also be available to non-profit and charitable organizations.
Therefore, an affected small business’ rent would be allocated as follows:
- 25% - Tenant
- 25% - Landlord
- 50% - Provincial and Federal Government Support.
The Canada Emergency Commercial Rent Assistance program is expected to be operational by mid-May, with commercial property owners lowering rents for their small business tenant’s payable for the months of April and May, retroactively, and for June.
Additional information about the Canada Emergency Commercial Rent Assistance program are expected to surface in the next coming days. McLennan Ross will continue to monitor these new measures and provide all necessary updates.
If you have questions regarding Corporate Commercial Securities matters please reach out to Marco Marrelli, Dani Fialkov, Pat Haughian, or Mohamed Denny.