Up to 75% rent relief for small businesses

Details on the program:

• The program will provide forgivable loans to qualifying commercial property owners to cover 50 per cent of three monthly rent payments that are payable by eligible small business tenants who are experiencing financial hardship during April, May, and June.
• The loans will be forgiven if the mortgaged property owner agrees to reduce the eligible small business tenants’ rent by at least 75 per cent for the three corresponding months under a rent forgiveness agreement, which will include a term not to evict the tenant while the agreement is in place. The small business tenant would cover the remainder, up to 25 per cent of the rent.
• Impacted small business tenants are businesses paying less than $50,000 per month in rent and who have temporarily ceased operations or have experienced at least a 70 per cent drop in pre-Covid-19 revenues. This support will also be available to non-profit and charitable organizations.

Yesterday’s announcement is part of the Government of Canada’s Covid-19 Economic Response Plan, which is addressing the challenges facing Canadians and their employers during this time of global uncertainty. The government continues to assess and respond to the impacts of Covid-19, and stands ready to take additional actions as needed to stabilize the economy and mitigate the impacts of the pandemic.

“More help is on the way for our small businesses across the country. They are the backbone of our families, our communities, and our economy. That is why we will continue working closely with provinces and territories to make sure that Canadian businesses have the support they need during these difficult times,” said Trudeau.

Quick Facts

• The Canada Mortgage and Housing Corporation will administer and deliver the CECRA, a collaboration between the federal government and provincial and territorial governments, which are responsible for property owner-tenant relationships.
• Provinces and territories have agreed to cost share total costs and facilitate implementation of the program. They will cost share up to 25 per cent of costs, subject to terms of agreements with the federal government.
• It is expected that CECRA will be operational by mid-May, with commercial property owners lowering the rents of their small business tenants payable for the months of April and May, retroactively, and for June.
• Further details on CECRA will be shared in the near future once final terms and conditions are available. The federal government and provincial and territorial governments urge property owners to provide flexibility to tenants facing hardship in this uncertain time.
• Under a rent forgiveness agreement, which includes a moratorium on eviction, the mortgaged commercial property owner would reduce the small business tenant’s monthly rent by at least 75 per cent. The tenant would be responsible for covering 25 per cent, the property owner 25 per cent, while the federal government and provinces would share the remaining 50 per cent. The forgivable loans would be disbursed directly to the mortgage lender.

Ontario relief for small businesses and landlords

Details of the new program were announced yesterday by Premier Doug Ford, Rod Phillips, Minister of Finance, Christine Elliott, Deputy Premier and Minister of Health, and Dr. Merrilee Fullerton, Minister of Long-Term Care.

“The vast majority of Ontario’s small businesses and landlords are struggling during this extraordinary public health emergency,” said Premier Ford. “That’s why we are doing everything we can to support them through these tough economic times, so they can hit the ground running when we are in a position to open up the provincial economy. I want to thank the federal government for partnering with us to help our small businesses and commercial landlords. I look forward to working together to also provide much-needed support to residential renters ahead of May 1.”

The OCECRA will provide forgivable loans to eligible commercial property owners experiencing potential rent shortfalls because their small business tenants have been heavily impacted by the Covid-19 crisis. To receive the loan, property owners will be required to reduce the rental costs of small business tenants for April to June 2020 by at least 75 per cent and commit to a moratorium on evictions for three months.

As part of Ontario’s Action Plan: Responding to Covid-19, the government has implemented a series of cash flow supports amounting to $10 billion to help support jobs and the economy, including:

• Doubling the Employer Health Tax exemption for 2020, cutting taxes by $355 million, benefiting roughly 57,000 employers;

• Eliminating penalties and interest to businesses who miss filing or remittance deadlines for various provincially administered taxes for five months starting April 1, 2020, providing up to $6 billion in cashflow for about 100,000 Ontario businesses;

• Postponing the planned property tax reassessment for 2021, providing stability for Ontario’s property taxpayers;

• Deferring the upcoming quarterly (June 30) remittance of education property tax to school boards by 90 days, providing municipalities with the flexibility to, in turn, provide property tax deferrals of over $1.8 billion to local residents and businesses;

• Implementing the new Regional Opportunities Investment Tax Credit for businesses that make eligible capital investments in designated regions of the province where employment growth has significantly lagged behind below the provincial average.

Ontario has also suspended time-of-use electricity rates for eligible small businesses, as well as residential and farm time-of-use customers, holding electricity prices to the off-peak rate of 10.1 cents-per-kilowatt-hour, for 24 hours per day, seven days a week for 45 days, for all time-of-use customers, who make up the majority of electricity consumers in the province. By switching to a fixed off-peak rate, time-of-use customers will see rate reductions of over 50 per cent compared to on-peak rates.

The Ontario government has also worked with the federal government to develop the Small and Medium-sized Enterprise Loan that will enable up to $40 billion in lending, supported through Export Development Canada and the Business Development Bank. This program will help businesses meet cash flow requirements through guaranteed loans.