The Canada Emergency Commercial Rent Assistance (CECRA) to bring rent relief to small business tenants

May 26, 2020


The federal government, in partnership with the provinces and territories, announced the creation of the Canada Emergency Commercial Rent Assistance (CECRA) for small businesses as a way to help eligible commercial property owners reduce or forgive rent for small business tenants impacted by COVID-19 by 75% for April, May, and June 2020. Administered by Canada Mortgage and Housing Corporation (CMHC) and delivered by MCAP and First Canadian Title, the application process for the CECRA for small businesses opened on May 25, 2020.

If you are a commercial property owner or a small business tenant, chances are you have a lot questions about the CECRA and how it may benefit you. Here is what we know and how BDO can help you.

What is the CECRA for small businesses?

The CECRA for small businesses provides unsecured forgivable loans to qualifying commercial property owners to cover up to 50% of gross rent for the three monthly rent payments payable by eligible small business tenants experiencing financial hardship as a direct result of COVID-19.

Property owners are required to use the funds received from the CECRA for small businesses to reimburse impacted tenants for any rent paid above 25% of the rent owed during the eligible period (unless the tenant chooses to apply this amount against future rent). While reimbursing tenants is the first priority, property owners are also permitted to apply these funds to costs and expenses related directly to the property, including financing held by the property owner and maintenance and repair obligations.

The small business tenant is required to cover the remainder of the monthly gross rent payments, up to a maximum of 25%. Monthly gross rent is a defined calculation for the purposes of the CECRA for small businesses. A table for determining what is included and excluded for the purposes of this calculation can be found on CMHC’s website.

The loans will be forgiven on December 31, 2020, if the property owner fulfills all applicable program terms and conditions, which includes complying with the rent reduction agreement and ensuring that all attestations and supporting documentation submitted with the application are accurate and truthful. If the property owner files for bankruptcy, restructures, reorganizes or dissolves their business, the loans will be need to be repaid. As well, in the event of default, CMHC has full recourse to recover the CECRA funding from the property owner.

The federal, provincial, and territorial governments are encouraging property owners to apply for the CECRA for small businesses and urge them to provide flexibility to tenants facing adversity in this uncertain time.

Who is eligible?

The CECRA for small business will provide forgivable loans to eligible commercial property owners, rather than direct rent relief to impacted small business tenants or subtenants.

The commercial property owner will need to apply and qualify for the program.

In order to be eligible for the program, the property owner will be required to meet the following criteria:

  • the applicant is the property owner of the commercial real property where the impacted small business tenants are located;
  • the applicant has entered or will enter into a legally binding rent reduction agreement for the period of April, May, and June, 2020, that will reduce impacted small business tenants’ rent by at least 75%; and
  • the rent reduction agreement with impacted tenants includes: a moratorium on eviction for the period during which the property owner agrees to apply the loan proceeds, and a declaration of rental revenue included in the attestation

A commercial property owner that is, or is controlled by, an individual holding federal or provincial political office will not be eligible for the CECRA for small businesses.

CMHC has indicated that the CECRA for small businesses is applicable to commercial property owners with eligible small business tenants and eligible small business subtenants, as well as residential components and multi-use residential properties with commercial tenants. CMHC has also specified that the CECRA for small businesses is available to property owners who do not hold a mortgage. In addition, property owners of newly constructed or recently purchased properties may also qualify for the CECRA for small businesses, provided the other program requirements are met, including having entered into a lease with an eligible tenant on or before April 1, 2020.

The CECRA for small businesses does not apply to any properties owned by the federal, provincial or municipal governments, where the government is the landlord of the small business tenant. There are certain exceptions, including:

  • Where there are long-term commercial leases with third parties to operate the property (i.e. airports), the third party is eligible for the CECRA for small businesses as the property owner.
  • Where there is a long-term lease to a First Nations, or Indigenous organization or government, the First Nation or Indigenous organization or government is eligible as the property owner.
  • Post-secondary institutions, hospitals, pension funds, and Crown corporations with limited appropriations designated as eligible under CECRA for small business are also eligible.

CMHC’s website provides guidance in cases where a property owner and tenant may not be dealing at arm’s length, including where the property owner owns the small business that is its only tenant. In this circumstance, the government is allowing property owners and tenants who are not at arm’s length to be eligible for the CECRA so long as all the general program requirements apply and there is a valid and enforceable lease agreement in place at a value that is not greater than market terms.

For the purposes of determining eligibility, CMHC defines “impacted small business tenants or subtenants” to be businesses, including non-profit and charitable organizations, that:

  • pay up to $50,000 per month in gross rent per location, as defined by a valid and enforceable lease agreement;
  • generate no more than $20 million in gross annual revenues, calculated on a consolidated basis; and
  • have experienced at least a 70% decline in pre-COVID-19 revenues.

Small businesses that opened on or after March 1, 2020 are not eligible for the CECRA for small businesses.

To determine the extent of the decline in revenues, a small business that was operating between April and June 2019 will use a comparison of gross revenues earned in April, May, and June 2020 to the same months in 2019.  A small business that was not operating during April, May and June 2019 will compare its average gross revenues from April, May and June 2020 to an average of gross revenues earned over the months of January and February 2020.

Revenues for this purpose must consist of revenue earned from ordinary activities in Canada. A small business will be required to calculate revenues using its normal accounting method and exclude revenues from extraordinary items. Registered charities and non-profit organizations will be required to include most forms of revenue in this calculation, other than revenues from non-arm’s length persons, and will be permitted to decide whether to include revenue from government sources as part of this calculation.

How do I apply?

The application portal for the CECRA for small businesses opened on May 25, 2020. Property owners are asked to register on a staggered basis, based on their location and the number of tenants that are eligible for the program. A chart is provided on CMHC’s website to assist in determining when a property owner can register.

The application is a two-step process:

Step 1. Property owners must register and create an account

Step 2. Property owners must complete an application and upload supporting documentation

To be eligible for the program, the supporting documentation must include:


  • Property owners must have each of their eligible commercial small business tenants and/or subtenants sign an attestation. Tenants are responsible for attesting to their eligibility with the program requirements.
  • Property owners must attest to their eligibility with the program requirements and sign an attestation confirming the information relating to the property owner and the property provided in the application is correct.
  • Property owners must enter into a legally binding rent reduction agreement with each impacted tenant to confirm the rent reduction in accordance with the program terms and conditions.  This agreement is conditional upon final approval of the application for CECRA for small businesses.
  • Property owners must agree to the terms and conditions in the application and outlined in the forgivable loan agreement.
In addition to the above, the applicant must provide specific information about the property, themselves, and the tenant:
  • Property information: property address, property type, property tax statement, latest rent roll for each property and the number of commercial units must be included
  • Applicant information: banking information (including bank statement), property owner contact information, co-ownership information and contact details for co-owners
  • Tenant information: tenant contact information, a registered business name, lease area and the monthly gross rent for the period of April, May and June 2020

The deadline to apply for the CECRA is August 31, 2020. While the program offers assistance for the months of April, May, and June 2020, it can be applied for retroactively. This means that property owners may still apply for assistance even after the three-month period has ended, as long as they are able to prove eligibility during those three months. In cases where rent was collected from the tenant before receiving approval for the program, the property owner will be required to refund the rent paid by the small business tenant for the relevant period. However, if the property owner and the tenant jointly agree, the property owner can instead grant a credit to the tenant for a future month’s rent.

Where can I get more information?

If you are a commercial property owner and are interested in learning more about how the CECRA might help you provide rent relief to your impacted small business tenants, contact your BDO advisor.

Jameson Bouffard, Partner, National Real Estate & Construction Leader

The information in this publication is current as of May 26, 2020.

This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.