Canadian small businesses will receive some rent relief during COVID-19

Prime Minister Trudeau announced on Thursday April 16, 2020 a new program to assist small businesses that are stuck in commercial lease agreements that they cannot make payments on.

The Canada Emergency Commercial Rent Assistance program (“CECRA”) will assist small businesses with rent for April, May and June.

Details on the CECRA program

The program will, according to a PM’s office press release “seek to provide loans, including forgivable loans, to commercial property owners who in turn will lower or forgo the rent of small businesses for April (retroactive), May, and June.”

Since rental arrangements are largely governed by provincial legislation, this federal program will require co-operation with provincial governments.

Full details were not made available. I am anticipating answers to the following questions shortly:

• What will qualify as a small business for the purposes of CECRA?
• What will the size of the loans be, and will there be any caps?
• How will CECRA be administered?
• Terms on the loans?
• What proportion will be forgivable?
• How will a commercial property owner demonstrate that they have lowered or waived the rent of their tenants?
• What happens if a property owner receives a loan but doesn’t lower rent?

Negotiations ongoing

Landlords and tenants engaged in negotiations over past or future rent for the months of April, May and June should factor in the possibility of assistance from the CECRA into their negotiations. Some decisions respecting such negotiations could be deferred until more details are known about the program.

If you have questions or need legal assistance with a commercial lease during COVID-19, don’t hesitate to contact Parr Business Law.