Organizations can apply for federal emergency rent subsidy starting Monday

Businesses, nonprofits and charities hit financially by the pandemic will be able to apply for the federal government's new rent subsidy program starting Monday. 

The Canada Emergency Rent Subsidy, CERS, which replaces the federal government's Canada Emergency Commercial Rent Assistance (CECRA) program, will provide up to 90 per cent rent support for qualifying businesses.

The federal government's CECRA program, launched in April, initially saw a low take-up among businesses because the program required landlords to apply for the benefit on behalf of tenants. The new CERS program allows tenants to apply directly to the federal government.

Under the new program, organizations that have seen a decline of 70 per cent or more in their revenues because of the pandemic are eligible for a 65 per cent rent subsidy. 

The subsidy rate declines gradually for organizations that have seen declines below 70 cent.

The federal government uses formulas to calculate the decline in the subsidy rate. An organization that lost 50 per cent of revenues, for example, would get a 40 per cent subsidy, while one that saw revenues drop 25 per cent would get a 20 per cent subsidy. 

When CERS was announced it was criticized for requiring that cash-strapped organizations pay their rent first before claiming it back through the subsidy. The Liberal government tried to deal with that glitch with a legislative amendment but it failed because of a procedural error. 

To ensure organizations can claim the subsidy immediately, even if they have not paid rent, the finance department has notified the Canada Revenue Agency that it intends to pursue a legislative amendment to have 'rent owed' considered a qualifying expense at the time of the application — providing the organization commits to using the subsidy to actually pay rent owed.

The CRA, which is administering the program, will treat rent owed as though it has already been passed through Parliament, said a finance official speaking on background. 

The lockdown support

While the program is called a 'rent subsidy,' it allows organizations to claim support for eligible expenses that go beyond rent, such as property taxes, school taxes, municipal taxes, property insurance and commercial mortgage interest.

An additional 25 per cent subsidy called the 'lockdown support' will be available for organizations that are forced temporarily to close or restrict their business because of a public health directive. 

Unlike the CERS program, the lockdown support is not calculated on a sliding scale. To qualify for it, an organization must have seen revenues decline by at least 25 per cent from pre-pandemic levels as a result of a public health order. 

A restaurant told that it can no longer serve diners inside, for example, would qualify for the lockdown support, but a take-out restaurant with a few indoor tables would not. 

Subsidy rates may change Dec. 19

Combined with the lockdown support, the new CERS benefit could provide some organizations with a rent subsidy of 90 per cent of eligible expenses. 

The new program runs until June 2021, but the federal government is only guaranteeing the subsidy rate until Dec. 19, 2020. An official speaking on background said the federal government wants to have the flexibility to change the subsidy rate in the event the situation improves or worsens. 

Each organization can claim up to $75,000 of eligible expenses per location, with an overall cap of $300,000 for each qualifying period. Right now we are in period 9, which runs from Oct. 25 until Nov. 21. Period 10 runs from Nov. 22 to Dec. 19. 

Shortly before the end of period 10, the federal government will announce any changes in the subsidy rate for periods 11 and up. 

The CERS subsidy is backdated to the beginning of period 8, which began Sept. 27 and ran until Oct. 24.