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


The federal government, in partnership with the provinces and territories, introduced 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. Over the summer, the federal government announced two extensions to the CECRA for small businesses program — one through to the end of July 2020, and another to the end of August 2020.

More recently, on September 8, 2020, the Deputy Prime Minister and Minister of Finance, Chrystia Freeland, and the Minister of Small Business, Export Promotion and International Trade, Mary Ng, announced that the CECRA for small businesses will be extended a final time— by one more month— to help eligible small businesses pay rent for September. Administered by Canada Mortgage and Housing Corporation (CMHC) and delivered by MCAP and First Canadian Title (FCT), the application process for the CECRA for small businesses opened in the spring.

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

The CECRA for small businesses provides unsecured forgivable loans to qualifying commercial property owners to cover up to 50% of gross rent for up to six 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 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. Several provinces, including Ontario, Alberta and British Columbia, have introduced legislation to prevent commercial evictions in an effort to bolster applications for the program by commercial property owners with eligible small business tenants.

The CECRA for small business provides 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 is required to meet the following criteria:

  • the applicant must own commercial real property, which is occupied by one or more impacted small business tenants;
  • 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 applicant must ensure that the rent reduction agreement with each impacted tenant 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.

Property owners of newly constructed or recently purchased properties may also qualify for the CECRA for small businesses, as well as property owners with short term, month-to-month leases, provided the other program requirements are met and there was a legally binding lease with an eligible tenant in place 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.

The help section of CMHC's website portal now provides expansive guidance on the following:

  • sub-lease scenarios;
  • rent reduction agreement rider; and
  • trust and agency.

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.

Small business tenants that qualify for the CECRA for small businesses based on the above eligibility criteria are able to apply for the additional one, two, or three-month extension to September 2020 without having to demonstrate that they experienced a 70% decline in revenue during July, August, and/or September 2020. Instead, it will be sufficient for tenants to rely on having met this requirement for April, May and June only.

To determine whether there has been a 70% 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.

The application portal for the CECRA for small businesses opened on May 25, 2020.

The application is a two-step process:

Step 1. Property owners must register and create an account

Step 2. Property owners must complete the application process and upload the required forms

Property owners may be contacted by MCAP or FCT and should note that the approval process may take up to two weeks.

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; and
  • 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 for property owners to submit applications for the CECRA for small businesses program was September 30, 2020. For those property owners who have already submitted an application, the deadline to opt-in for the additional funding is October 30, 2020. Note that 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.

Participation in the July and/or August and/or September extension is voluntary, and not all tenants included in the original application will need to be included when applying for the additional extensions. Note that a property owner who submitted a CECRA application for the period of April to June has the choice to opt-in for an extension of just the month of July, the months of July and August, or for the months of July, August, and September. A separate application is required for the September extension, after first applying for the July and August extensions. Property owners that previously opted-in for the July extension are able to opt-in first for the August extension, and afterwards opt-in for the September extension.

CMHC's website provides that the amount in respect of the forgivable loan is exempt from sales taxes (GST and HST). In addition, GST and HST are also excluded from determining the gross rent amount, which means that the monthly rent amounts are computed before applicable sales taxes. As well, property owners are not required to collect GST/HST with respect to payments that they have received from CMHC under the CECRA for small businesses program. While guidance has not yet been provided by the Canada Revenue Agency (CRA) with respect to whether property owners are required to collect GST/HST from tenants on the full amount of the rent due each month, it is expected that if the landlord issues a credit note in the amount of the rent reduction granted to the tenant, the property owner will only be required to collect GST/HST from tenants on the amount of rent the tenant actually pays during the period in which rent relief is provided under this program. Official guidance is expected to be released by the CRA in the next few weeks.

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.

The information in this publication is current as of October 8, 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.

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