The Provincial Government recently announced a partnership with the Government of Canada to bring forward a rent assistance program to help Ontario businesses. The program, known as Ontario Canada Emergency Commercial Rent Assistance (OCECRA), allows commercial property owners who are experiencing financial hardship as a result of COVID-19 to apply for a forgivable loan of up to 50% of rent payable by their small business tenants.
How does the program work?
The OCECRA program asks small business tenants and landlords to work together to reduce their rent payment. Small business landlords and tenants would each be asked to pay 25 percent of the before profit costs, and the federal and provincial governments would pay the remaining 50 percent.
The OCECRA operates through a forgivable loan structure, providing loans to qualifying commercial property owners to cover 50 percent of three monthly rent payments. The OCECRA will be available until September 30, 2020 and will be retroactive to April 1, covering April, May and June 2020.
The loans will only be forgiven if landlords work to reduce the tenants’ rent by at least 75% during the three corresponding months, under a rent forgiveness agreement. The agreement would include a term noting that the landlord would not evict the tenant while the agreement is in place.
If a landlord applies for this program, it should be noted that the government funding will not cover the commercial property owner’s profits derived from rental income, meaning that landlords will have to agree to forego any profit for a three-month period.
The loan will be administered by the Canada Mortgage and Housing Corporation.
Who is eligible?
Eligible small businesses include:
- Those who have experienced at least a 70 percent drop in revenues due to the impact of COVID-19; and,
- Tenants who are paying less than $50 000 per month in rent.
Businesses can determine if they are eligible by comparing their current revenue to revenues for the same period in 2019, or to average revenues from January and February 2020.
To be eligible for the OCECRA, the property owners must be the registered owner and landlord of the property where the impacted small business tenants are located.
Mixed-use properties with a commercial component that makes up at least 30% of the property are also eligible for the OCECRA.
Are residential landlords covered under the OCECRA?
The OCECRA is intended for commercial landlords and small business tenants. Residential landlords are not covered by the program, but the government is considering residential supports at this time. For more information, please see what OREA is asking for from the provincial government regarding landlords and tenants who are facing financial difficulty due to COVID-19.
What do I Need to Apply?
To apply, property owners will need to provide:
Property Owner Information:
- Including property address, property type, property tax statement, latest rent roll for each property and the number of commercial units.
- Applicant information including banking information, property owner contact information, co-ownership information and contact details for co-owners
- Including tenant contact information, registered business name, number of employees, consolidated revenues, lease area and the monthly gross rent for the period of April, May and June 2020.
The OCECRA application can be accessed via the Canada Mortgage and Housing Corporation. If you have any further questions, please reach out to OREA’s Government Relations team at email@example.com.