What's the Deal With CECRA? My Thoughts On the Government's Newest Initiative to Help Businesses' Pay Rent


www.aaronmilleryourlawyer.com ** The content of this article is the sole and exclusive property of Aaron Miller, Barrister & Solicitor. In no way does the content of this article represent a lawyer-client retainer, nor is the content representative of legal advice.


While conducting a consultation with one of my commercial tenant clients the other day, a major initiative from both the provincial and federal governments came up: The impact of the Canada Emergency Commercial Rent Assistance (CECRA) program. To put it plainly, CECRA (officially introduced on April 16, 2020) was created to help the small-to-medium size business out. Primarily, the Ontario and Canadian governments have partnered to do one particularly important thing: Allow these businesses to pay their full (or close to full) rent.

As you can imagine, COVID has just about affected everything. This includes, small-to-medium size businesses, who although might have been doing very well pre-COVID, are now often struggling to make rent. One of my first articles on this blog, "Can't Afford To Pay Rent During the COVID Crisis? - Not All Is Lost For Tenant Businesses", talked about how small-to-medium size business tenants can, using legal strategy, avoid a hostile or uncompromising landlord from enforcing rent payments. However, in light of an obvious need to help small and medium size businesses out, our provincial and federal governments have now introduced CECRA.

What is CECRA you might ask? Although officially introduced in mid-April, the program has not been fully formulated for the most part until later that same month. Below is a short breakdown describing what Ontario's newest relief to help small-to-medium size businesses is:

  • CECRA has the ability to allow small-to-medium size businesses to have up to 75% of their rent covered for the months of April, May, and June of 2020;
  • Landlords who enter into the CECRA program with commercial tenants will be provided with forgivable loans to help cover 50% of the commercial tenant rent;
  • As long as a commercial Landlord and Tenant enter into a Rent Reduction Agreement, and the commercial Tenant qualifies under CECRA guidelines, the program will apply.
 Now for the follow up questions or "catch" - is the CECRA mandatory for all commercial Landlords and Tenants, and/or who is considered a "small business" for CECRA eligibility? To answer the first part, CECRA is not mandatory. In fact, the commercial Landlord is technically the initiator. This being said, there are several good reasons why the Landlord would want to be the initiator. They include:

  • Keeping their small-to-medium size tenant: Plainly put, why wouldn't a Landlord want to keep a Tenant who for the most part, has probably paid their rent on time pre-COVID? Commercial tenants can provide a long-term revenue stream for Landlords. Furthermore, the business they attract has the ability to increase Landlord property value.
  • It looks good on the Landlords: Let's be honest, lately, the news have showcased Landlords in not the best of light. The stereotype of the hostile/ruthless landlord has been profiled in several instances during COVID. Society is currently in sensitive times, and for those Landlords not giving their Tenants a break - it could be a major PR hurdle.

 As for which commercial tenant businesses are eligible for CECRA, the following briefly describes who is a "small business" for CECRA purposes:

  • Pays no more than $50,000 in rent per month;
  • Generates no more than $20 million in yearly revenue;
  • Has Experienced at least a 70% decline in revenues during the months of April to June (2020).

It should be noted that for tenant businesses who are unsure if they have suffered a 70% decline, their 2020 statements from April to June can be compared to those from the same months in 2019. Bottom line - CECRA works both ways. Although intended to assist small-to-medium commercial businesses, it also benefits commercial landlords who want to keep tenants that have the ability to make them money in the long-run. Despite this, the program remains voluntary. Will this have an adverse effect on both parties during this crisis? Time will only tell, but feel free to share your thoughts on CECRA with me!


Aaron Miller is a Toronto based, Ontario lawyer who is the proud owner of Aaron Miller, Barrister & Solicitor. Aaron also acts as Legal Counsel for Executive Furniture Rentals in Toronto. If you are a small-to-medium size business that is experiencing a commercial landlord-tenant issue, feel free to contact Aaron at 416-659-6665 or at aaron@aaronmilleryourlawyer.com. He would love to hear from you!

Comments

Post a Comment

Popular posts from this blog

Condo Cost Sharing Agreements: What Do They Really Mean?

Image
www.aaronmilleryourlawyer.com ** The contents of this article are the sole property of Aaron Miller, Barrister & Solicitor, and may not be used elsewhere without its permission. The contents reflect the author's opinion, and are not meant to convey legal advice or constitute a lawyer-client retainer. If you are a condo owner or a condo board member, you might b e familiar with the following terms: "Phase 1", "Phase 2", etc. To make it clear, this sort of language is often used to designate multiple condo corporations representing different segments of a condo building. In some cases, for a single building, there will be multiple condo corporations. Although "dividing the building up" into several condo corporations can be more practical when governing multiple units, certain snags may arise. This is particularly true when it comes to the collecting of monies for shared expenses. Oftentimes, examples of shared expenses can include the followi
Read more

Condo Lien 101: Here's What You Need To Know About Condo Liens

Image
www.aaronmilleryourlawyer.com * The contents of this article are the sole and exclusive property of Aaron Miller, Barrister & Solicitor. The contents herein are an opinion of the author and does not constitute legal advice. In no way does this article constitute a legal retainer. Picture yourself in the following situation: You are a condo board member, and are seemingly aware that a condo owner is failing to pay their common expenses. These common expenses are the "lifeblood" of the condo building's existence. Without common expenses collected from condo owners, there is no way the condo will be able to pay for services such as security, landscaping, maintenance, projects and any other services the condo may need for the benefit of the owners at large. Knowing all of this, you continue to get more and more worried and make your thoughts known to other board members.  What would the knowledgeable condo board or board member do to rectify a non-paying condo ow
Read more

Can a Commercial Tenant Break Rent During the COVID Pandemic? Beware of Tenant Breach

Image
  www.aaronmilleryourlawyer.com ** The contents of this article are the sole property of A aron Miller, Barrister & Solicitor , and are not intended to be used without the express permission of Aaron Miller, Barrister & Solicitor. The contents of this article are not intended to provide legal advice or constitute a legal retainer.       As you are likely aware, the COVID pandemic has been really tough for commercial tenants across Ontario. Declining revenues have made it more and more difficult for commercial tenants to pay rent. For a lot of small to medium size businesses, a loss of revenues, and a recalculation of budgeting money, has been extremely difficult. Meanwhile, tenant businesses unfortunately, have been faced with situations where their commercial landlords have either refused to engage in rent reduction, or have only minimally decreased rent (sometimes deferring rent payments till a later date). Regardless of the scenario that a commercial tenant faces itself wit
Read more