Ontario-Canada Emergency Commercial Rent Assistance Program (OCECRA)

*UPDATE*- For Additional Information Click HERE

Ontario Provides Urgent Relief for Small Businesses and Landlords – Applications to open May 25th.

  • The Ontario government is partnering with the federal government to provide urgent relief for small businesses and landlords affected by the COVID-19 outbreak.
  • Application documents and updated criteria for the Emergency Commercial Rent Assistance program are now available, and that the program will be opened for applications beginning on May 25th.
    • Applications will be accepted through the Canada Mortgage and Housing Corporation website (application documents can be accessed now).
  • The province is committing $241 million through the new Ontario-Canada Emergency Commercial Rent Assistance Program (OCECRA).
  • The total amount of provincial-federal relief that would be provided is more than $900 million, helping to ensure small businesses are ready to reopen their doors when the emergency measures are lifted.
  • 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.
  • It is expected that the program will be operational by mid-May.
  • The forgivable loans would be disbursed directly to the mortgage lender of the commercial property in question.
  • 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 (see March 25th – Ontario’s Action Plan: Responding to COVID-19 (March 2020 Economic and Fiscal Update) for details) .
  • How does the program work?
    • The program has been developed to share the cost between small business tenants and landlords.
    • Small business tenants and landlords would each be asked to pay 25 per cent of the before profit costs and the provincial and federal government would cost share the remaining 50 per cent.
    • 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.
    • In applying for this program, the property owner agrees to forego profit for a three-month period.
    • For example, a monthly rent for a small business is $10,000. In this example, assume the landlord doesn’t make a profit. The landlord forgoes $2,500 (25 per cent of rent). The small business would be responsible for paying $2,500 (25 per cent of rent). The government would cover the remaining $5,000, with $3,750 from the federal government (37.5 per cent of rent) and $1,250 (12.5 per cent of rent) from the provincial government.
  • How long would a commercial property owner have to apply for OCECRA?
    • The OCECRA would be administered by the Canada Mortgage and Housing Corporation (CMHC) and would be available until September 30, 2020.
    • Support would be retroactive to April 1, covering April, May and June 2020.
  • What are the eligibility requirements for small businesses?
    • An eligible small business tenant is one that:
    • Pays monthly rent not exceeding $50,000 in gross rent payments; and is, A non-essential small business that has temporarily closed, or who is experiencing a 70 per cent drop in pre-COVID-19 revenues (determined by comparing revenues in April, May or June to the same month in 2019 or alternatively compared to average revenues for January and February 2020).
    • Generate no more than $20 million in gross annual revenues, calculated on a consolidated basis (at the ultimate parent level) **
    • To measure revenue loss, small businesses can compare revenues in April, May and June of 2020 to that of the same month of 2019. They can also use an average of their revenues earned in January and February of 2020.
    • Not-for-profit organizations and charitable entities would also be considered for the program.
  • Are there any eligibility requirements for commercial property owners?
    • The OCECRA would apply to commercial properties with small business tenants.
    • Commercial properties with a residential component, and residential mixed-use properties with a 30 per cent commercial component, would be equally eligible for support with respect to their commercial tenants.
    • If a property owner does not have a mortgage secured by a commercial rental property, the property owner should contact Canada Mortgage and Housing Corporation (CMHC) to discuss program options, which may include applying funds against other forms of debt facilities or fixed cost payment obligations (e.g. utilities).