Rent Reduction Agreement: Understanding the Canada Emergency Commercial Rent Assistance (CECRA) Program
The COVID-19 pandemic has caused a lot of economic instability across the globe, and Canada is no exception. Small businesses have been hit hard, with many unable to pay their rent due to lost income. In response, the Canadian government launched the Canada Emergency Commercial Rent Assistance (CECRA) program to provide relief in the form of rent reduction to commercial tenants.
What is CECRA?
The CECRA program is designed to provide relief to small business tenants who are struggling to pay their rent due to the pandemic. It is administered by the Canada Mortgage and Housing Corporation (CMHC) and provides direct rent relief to commercial property owners, who in turn pass on the savings to their tenants.
The program is targeted towards small business tenants who are paying less than $50,000 per month in rent and have experienced a 70% or greater decline in revenue due to COVID-19. To be eligible, tenants must also have a lease agreement in place with their landlord as of March 1st, 2020.
How Does CECRA Work?
Under the CECRA program, the commercial property owner is responsible for applying for the rent reduction on behalf of their tenants. The application process involves providing financial information and supporting documentation, including proof of rent payments made by tenants and evidence of revenue decline.
If the application is approved, the landlord will receive a forgivable loan to cover 50% of the rent owed for the months of April, May, and June 2020. The remaining 25% of the rent is paid by the tenant, and the final 25% is covered by the landlord.
What Do Tenants Need to Do?
Tenants who are eligible for the CECRA program need to work with their landlords to ensure that the rent reduction agreement is in place. The tenant must pay their portion of the rent, which is 25%, and provide documentation to support their application.
Landlords are required to sign an agreement with their tenants that includes a rent reduction for April, May, and June 2020, and a commitment not to evict the tenant for non-payment of rent during this period.
Conclusion
The CECRA program is a much-needed relief for small businesses struggling to pay their rent during the pandemic. By providing rent reduction to commercial property owners, the program ensures that tenants can keep their businesses afloat and avoid eviction.
As a tenant, it is important to work with your landlord to ensure that the rent reduction agreement is in place and that all supporting documentation has been submitted. With CECRA, small businesses can continue to operate and contribute to the Canadian economy, even in the face of unprecedented challenges.