The Canada Emergency Commercial Rent Assistance (CECRA) program was created by a partnership between the governments of Quebec and Canada to provide rent relief and assistance to small businesses.
Navigating the world according to CECRA is complicated – contracts and enrollment necessitate understanding of how the Federal and Provincial governments are working with an intermediary – the Canadian Mortgage and Housing Corporation (CMHC), for this program. Applications and data gathering are voluminous and lack the clarity of other COVID-related-crisis financial support programs previously announced by the Federal Government.
UNDERSTANDING HOW CECRA WORKS
1. Target tenants/landlords :
- Tenants: small-medium sized businesses, NPOs and registered charities that were already operating as at February 29, 2020 and that meet certain criteria, including, but not limited to a monthly gross rent under $50,000 $ and generate annual revenues under $20M.
- Landlords that own commercial real property which is occupied by one of more impacted small business tenants and that is not controlled by an individual holding federal or provincial political office.
2. Eligibility and Conditions:
- Tenant and landlord must have entered into a lease on or before April 1, 2020
- Tenant and landlord must enter into a legally binding rent reduction agreement for the period of April, May and June 2020, reducing a tenant’s rent by at least 75%.
3. Support Quantum
Landlords must agree to a reduction of gross rent by at least 75%. Government support would take the form of a forgivable loan. Conditions included in the rent reduction agreement must be respected in order for the loan to be forgiven on December 31, 2020.
4. Period Covered:
The CECRA program covers the rent payable for the months of April, May and June 2020.
The program is available since May 25, 2020. Applications must be filed by August 31, 2020.
6. Other Key Consideration:
- Landlords are not forced to participate to this program.
- Landlords will need to obtain an attestation for each impacted tenant seeking help.
- Properties with or without mortgage are eligible under the CECRA.
- Tenants may use forecasted numbers for June 2020 revenues.
- Tenants that paid April and/or May 2020 rent will either:
- Receive a reimbursement for the rent paid in excess of 25% (with the proceeds from the CECRA program received by the landlord), OR
- Receive a credit for future rental payments
KNOWING WHAT YOU CAN COUNT ON
Our Crisis Relief Team will work closely with our clients and non-clients alike, to guide them every step of the way on:
- Initial discussion to decide for the landlord to opt in/out to the program
- Consultation and communication with legal counsel, as necessary
- Registration and creation of an account – if you do not already have one
- Help in gathering the necessary documentation and data in order to prepare the application, including but not limited to assisting with:
- Documentation needed to register – leases, rental amounts, etc.
- Obtention of the required attestations/agreements from your eligible small commercial business tenants/sub-tenants (Agreements between tenants and landlord, potential discussion with lawyers, etc.)
- Filing required applications for the program, on your behalf:
- Assistance in completing and filing the landlord’s attestation form and providing landlord information;
- Assistance in understanding and application for the forgivable loan agreement between the landlord and CMHC;
- Calculating the required rent reduction to qualify for the program; and
Assist in calculating any amount owed to the tenant based on rent reduction and rent paid for the months of April, May and June.
HOW MUCH DOES IT COSTS?
CECRA being complex, the fees for this engagement are higher than our previous COVID-19 support work. However, they will still be based well below our regular ones, at a discounted average hourly rate of $275 per hour, plus out of pocket expenses, the whole subject to applicable sales taxes.
- For existing clients, amounts are payable upon receipt of our invoice.
- For new clients*, there will be a $5,000 retainer, with balance due upon invoicing.
Assisting landlords, will in return, allow landlords to assist their clients, which supports our end game: getting the economy back on track for us all.
CONTACT OUR COVID-19 CRISIS RELIEF TEAM
For more information, please contact one of our Crisis Relief Team members:
* For all new clients, a background verification acceptable to the Firm will be required before accepting the mandate. The Firm reserves the right to cease work, and not refund any deposits, if a potential client is working in bad faith on any of the Government programs, and/or is uncooperative with our team in reaching the desired deliverables. Our reputation in the Financial and Business Community is vital to the success and credibility of our Firm and its team. We expect the same from potential clients, and we have demanded of our existing clients over the years.