Since the outbreak of the COVID-19 pandemic, Canadian provinces and territories have all declared states of emergency or public health emergency. Social distancing measures have been implemented, businesses have been forced to shut down, and the economy has slowed to a crawl. Despite the disruption, commercial contractual obligations still persist, and small business tenants are struggling to honor their rent payments and other lease obligations.
Canada Emergency Commercial Rent Assistance for Small Businesses
To provide rent relief for small businesses, the federal government, in partnership with the provinces and territories, launched the Canada Emergency Commercial Rent Assistance (CECRA) program. CECRA provides forgivable loans to commercial landlords who agree to: (1) reduce an impacted small business tenants’ rent by 75 percent for the months of April, May and June 2020, and (2) a moratorium on evictions for that same period. However, due to a myriad of reasons (including the onerous application process), landlords have been reluctant to participate in the program. Moreover, even with government assistance, small businesses are still experiencing difficulty paying rent. In a recent survey conducted by the Canadian Federation of Independent Businesses, half of small business owners said they couldn’t pay June rent without further help from the government, and 20% feared eviction.
Provincial Eviction Bans for Non-Payment of Rent
In order to encourage landlords to participate in CECRA (and to give those tenants whose landlords choose not to participate in CECRA a break) many Canadian provinces have introduced legislation preventing landlords from evicting eligible small business tenants due to rent defaults for the short term.