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Federal Rent Assistance for Canadian Businesses

Federal Rent Assistance for Canadian Businesses

The Canadian government, in partnership with the provinces and territories, recently announced the Canada Emergency Commercial Rent Assistance (“CECRA”) for small businesses that are struggling to pay their landlords as a result of the COVID-19 Pandemic (“Pandemic”). This is welcome news for many local businesses, with many rents already overdue for the months of April and May.

As previously discussed in our blog on commercial lease considerations, many Alberta businesses have now been effectively closed and without revenue since mid-March.


CECRA is expected to be operational by mid-May, and will result in commercial property owners lowering the rents of their small business tenants for three months from April to June 2020.

CECRA will be administered through the Canada Mortgage and Housing Corporation (“CMHC”) and will reduce the amount of commercial rents payable, retroactive to April 2020, by 75 percent for small businesses that qualify for the benefit.

More information about the CECRA program, including a sign up page for more information on the program when it is released, can be found here.

The program will provide forgivable loans directly to qualifying commercial landlords to cover 50 per cent of the three monthly rent payments that are payable by eligible small business tenants.

CECRA loans will be forgiven if:

  • The landlord agrees to reduce an eligible small business tenant’s rent by at least 75 per cent for these three months (April, May and June 2020) under a rent forgiveness agreement;
  • The rent forgiveness agreement includes a term not to evict the tenant while the agreement is in place;
  • The property owner covers 25 percent of the rent; and
  • The small business tenant covers the remainder of the rent, up to 25 per cent.

The federal government and the provinces and territories will share the remaining 50 percent payment of the commercial rent amount, through the forgivable loan.


Impacted small businesses will qualify for the CECRA if they:

  • Pay no more than $50,000 in monthly gross rent per location (as defined by a valid and enforceable lease agreement) and have temporarily ceased operations; or
  • Generate no more than $20 million in gross annual revenues, calculated on a consolidated basis (at the ultimate parent level); and
  • Have temporarily ceased operations (and are generating no revenues) OR have experienced at least a 70 per cent decline in pre-Pandemic revenues. To measure revenue loss, small businesses can compare revenues in April, May and June of 2020 to that of the same month of 2019. They can also use an average of their revenues earned in January and February of 2020.

CECRA will also be available to non-profit and charitable organizations.


In order to qualify for CECRA, property owners must:

  • Own property that generates rental revenue from commercial real property located in Canada;
  • Own commercial real property where the impacted small business tenants are located;
  • Have a mortgage loan secured by the commercial real property, occupied by one or more small business tenants;
  • Have entered or will enter into a rent reduction agreement for the period of April to June 2020, that will reduce impacted small business tenant’s rent by at least 75%, which rent reduction agreement must include a moratorium on eviction for the period of April to June 2020; and
  • Have declared rental income on your tax return (personal or corporate) for tax years 2018 and/or 2019.

The federal government has not yet released any further details on CECRA (other than what can be found on the official CECRA page here, although it is expected to be operational in a week or two. Generally, CECRA is a welcome and much-needed initiative to support small businesses in Canada who are struggling as a result of the Pandemic.

Unfortunately, there may still be some small businesses who are not eligible for CECRA if their commercial landlords refuse to participate and/or refuse to cover 25 percent of the rent payments. For example, some landlords have said they need further information about the program before they would be willing to apply for CECRA (see one such story here). 

In addition, there is no general moratorium on commercial evictions included in CECRA: landlords have to agree voluntarily not to evict a commercial tenant while the rent forgiveness agreement is in place.

Neither does CECRA provide any relief for property owners without a mortgaged commercial rental property. For commercial tenants with landlords who do not have a mortgage on their rental property, no rent relief is currently available. However, we note that there has been some discussion that CHMC might consider options such as applying the forgivable loan against the landlord’s other forms of debt facilities or towards the landlord’s fixed cost payment obligations (such as utilities), instead of against the landlord’s mortgage. Whether this is occurs remains to be seen, but commercial landlords without a mortgage on their rental properties are being urged to contact CMHC directly.

Another concern is that three months of CECRA may not be enough to sustain small businesses who may remain closed past June 2020. However, CECRA can be extended by the federal and provincial/territorial governments if the Pandemic continues beyond June. We also note in its official statement that the federal government and provincial and territorial governments have urged property owners to provide flexibility to tenants facing hardship in this uncertain time.


The deadline to apply for the CECRA program is August 31, 2020. Property owners may apply for CECRA retroactively if they can meet eligibility criteria for the program, even if they have collected rent for the periods of April to June 2020. However, property owners must refund or provide a credit to the tenant if rent has already been collected from the tenant and the CECRA is approved retroactively.


We understand that the rapid emergence of COVID-19 means that many businesses are dealing with a myriad of legal issues. Please contact us if you have any legal questions about your contractual obligations in connection with COVID-19, or any other business or contract law matters. Our lawyers routinely work remotely and will continue to do so during this time. We remain available to provide legal advice and guidance to clients for all issues that may arise during the Outbreak.

For more updates related to COVID-19, please visit our resources page and follow us on LinkedIn.

As this is an ongoing situation of a global nature, the information provided herein is current as of the publishing date of this blog.

*This update is intended for general information only on the subject matter and is not to be taken as legal advice.

Posted: March 7, 2020

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