The lockdowns resulting from the Covid-19 pandemic caused catastrophic hardship for almost most businesses in Canada. Forced into lockdowns across the country and the world, company headquarters sat vacant for months.
While some companies had set up business continuity plans to involve remote work capabilities, the jobless rates skyrocketed when companies had to let workers go just to stay solvent.
Some companies were locked into very strict commercial rental agreements for office spaces and warehouses, and these costs are generally a significant part of a company’s overhead. Because of this and the uncertain future of the pandemic, the Canada Emergency Commercial Rent Assistance (CECRA) package was released on April 30, 2020.
CECRA was followed by the Canada Emergency Rent Subsidy (CERS) in September 2020 when it became clear that the pandemic was far from over and in fact, might get worse.
The goal of this article is to help explain what these bills were and how they worked to keep business afloat while they weathered the difficulties which arose because of the pandemic.
What Was CECRA?
This is a lot of letters, but governments tend to cling to their acronyms. CECRA was the first commercial rent subsidy plan implemented by the government and CERS was the follow-up once CECRA had expired in September 2020. The two bills were focused on providing government assistance to companies that were affected by the Covid-19 pandemic.
Starting with CECRA, the program was started on April 30, 2020. It was available to any landlord whose revenues are primarily received from commercial properties located within Canada.
CECRA provided landlords with money in the form of forgivable loans, and, as long as all of the terms and conditions were met, the landlords would not have to repay this money after December 31, 2020.
While the program was designed to help tenants of commercial properties, the idea was that landlords would have to be the ones to submit applications for their properties.
They would be provided with enough money to cover 75% of the rental obligations of their tenants, and they would then forgive up to 75% of the rent owed by tenants. Tenants would then be required to pay the remaining 25% of the rent owed.
What is CERS?
This program expired in September 2020. When it was clear that the Covid-19 pandemic was far from over, the government then implemented the follow up plan called the Canada Emergency Rent Subsidy (CERS). This subsidy went into effect September 26, 2020. While the goal of CECRA was to be more of a broad, sweeping, and decisive action to help keep businesses afloat, CERS reduced the amounts to help limit government spending while still offering solutions to help businesses still struggling to get back on their feet.
To help provide context, a subsidy is defined as a sum of money granted by the government or a public body to help businesses and keep the services they provide functioning and competitive. In this article, the subsidy was a bit more than that – it was a life ring thrown to businesses not only so they could remain competitive but also to remain in business.
CECRA was limited to only 75% of all rent owed to landlords. However, CERS reduced this amount across most businesses on a sliding scale, though the maximum possible subsidy went all the way to 90% of rent owed. The scale was based on a calculation of revenue lost as a result of the Covid-19 lockdowns, and this figure would be used to calculate how much rent owed by a tenant could be covered by CERS.
Even though the plan was designed to help landlords and their tenants, the program extended assistance so that any company with real or immovable rent or a mortgage who could prove loss of revenue during the Covid-19 pandemic would be eligible for the subsidy.
In addition, businesses and individual sole-proprietorships could claim for any eligible expenses including rent, property taxes, property insurance, and interest on commercial mortgages.
There is also a maximum of $75,000 per qualifying period for a given location and a maximum of $300,000 for any corporation with several qualifying properties.
CERS is planned to be in place until September 25, 2021. While there may still be businesses struggling even at this point, the programs have been largely successful at reducing the burdens of businesses so that they could focus their efforts on keeping Canadians employed.
Conclusion
CECRA and CERS were the Canada rent subsidy assistance programs implemented by the government of Canada in response to businesses that struggled and are still struggling during the Covid-19 pandemic.
The initial plan, CECRA, was far more sweeping with fewer restrictions and broader scope, though this may have been due to the dramatic halt of business across the globe in the early parts of the pandemic.
This plan allowed the government to formulate a new plan, CERS, which is still in effect as of Jun 2021 and has a more targeted approach that limits spending while still supporting businesses in need.
