On October 9, 2020, the federal government introduced the Canada Emergency Rent Subsidy ("CERS"), a new rent and mortgage support relief program for business owners impacted by Covid-19. The new program aims to replace the Canada Emergency Commercial Rent Assistance Program ("CECRA") by providing new relief measures better suited for qualifying business owners.
Previous measures under the CECRA
The CECRA program was previously announced in May 2020 and ran until September 30, 2020. Under this program, eligible businesses who experienced a 70% drop in pre-Covid-19 revenues could be eligible for a 75% reduction to their monthly gross rent. The landlord would reduce the eligible tenant's rent by 75% and receive a forgivable loan to cover 50% of the tenant's monthly gross rent. The remaining portion of the rent was to be incurred by the landlord.
The program was not well received by business owners. It required the landlord to apply for the relief measures for all eligible property. This resulted in numerous businesses being unable to receive support.
The new CERS program
Unlike the CECRA program, the newly proposed program will offer support directly to business owners. Tenants apply to the program themselves directly through the Canada Revenue Agency. The program's announcement also confirmed that it would provide a subsidy for eligible fixed property expenses, including rent and interest on commercial mortgages.
The program intends to provide support to qualifying businesses based on a sliding scale topping out at 65% of eligible expenses until December 19, 2020. The program is also intended to have a retroactive effect. Organizations will be able to make claims from September 27, 2020, to October 24, 2020. Businesses that were forced to close by order from a qualifying public health authority will be eligible for an additional 25% subsidy for eligible expenses. The program also intends to provide support to property owners.
The program is expected to be adapted for 2021. The government is expected to release more details on the program as it is getting ready to introduce legislation in the coming days.