In case you missed it: New Commercial Rent Relief Program announced
Today, Finance Minister Chrystia Freeland, announced new supports to help businesses including a new commercial rent program which CFA has been asking for. According to the news release, the supports, if passed by Parliament, will include:
New Canada Emergency Rent Subsidy
The new Canada Emergency Rent Subsidy will provide rent support directly to tenants from now until June 2021. According to Finance Canada, the new program will “provide simple and easy-to-access rent and mortgage support until June 2021 for qualifying organizations affected by COVID-19”. We are told that the new rent subsidy program will be administered through the CRA not CMHC.
The new rent program will help business who have suffered a revenue drop, by subsidizing a percentage of their expenses, on a sliding scale, up to a maximum of 65 per cent of eligible expenses until December 19, 2020. Program parameters for 2021 will be released in the future. Organizations will also be able to retroactively make claims for the period that began on September 27, 2020 and ends October 24, 2020.
Rent Subsidy Top Up
The program also includes a 25 per cent top up for organizations temporarily shut down by a mandatory public health order. This top up is in addition to the 65 per cent subsidy. This commitment was made in the recent Throne Speech which committed Ottawa to providing direct financial support to businesses temporarily shut down as a result of a local public health decision.
CEWS Extension until June 2021
The extension of the Canada Emergency Wage Subsidy until June 2021, would continue to protect jobs by helping businesses keep employees on the payroll and encouraging employers to re-hire their workers. The subsidy would remain at the current subsidy rate of up to a maximum of 65 per cent of eligible wages until December 19, 2020. This measure, according to the Finance Minister, is part of the government’s commitment to create over one million jobs and restore employment to the level it was before the pandemic.
Expanding the CEBA Loan Program – new $20K Top Up
They also announced they are expanding the Canada Emergency Business Account (CEBA) loans so that eligible borrowers can access an additional interest free loan of up to $20,000. 50 per cent of the additional financing would be forgivable if repaid by December 31, 2022. The application deadline for CEBA is also being extended to December 31, 2020.
The additional CEBA loan would effectively increase CEBA loans from $40,000 to $60,000 for eligible businesses, of which a total of $20,000 would be forgiven if the balance of the loan is repaid before December 31, 2022. To date, over 765,000 CEBA loans have been approved, representing more than $30 billion.
Giving tenants direct access to rent support is great news for all CFA members. We are happy that government is doing away with the complicated CMHC landlord tenant application process. We have asked the federal government to look at providing a top up rent subsidy for businesses that are forced to reduce capacity by public health (not just close). We are looking for clarity about whether or not new businesses that started after March 2020 will qualify for the new rent program.
The CEBA top up is good news but there are many unanswered questions on issues that we, and others, have been raising since March.
- Business bank accounts vs personal bank accounts: Under the current program criteria, a business that operates using a personal bank account was excluded from applying for the CEBA loan. The federal government is working with the banks on the issue but today’s announcement did not include the outcome of those discussions.
- Qualifying Thresholds: Under the current criteria, the Borrower’s total employment income paid in the 2019 calendar year was between$20,000 and $1,500,000. The CFA has been advocating for the top and bottom thresholds to be expanded to help more franchised businesses.
- Multiple Loans based on Location: Each qualifying business is limited to one CEBA loan for every CRA business account. The CFA believes that loans should be allowed for multiple locations based on business licenses, HST/GST accounts, WSIB accounts, etc. instead of simple corporate entities using the CRA account. We will continue to advocate for this change.