Canada Emergency Rent Subsidy (CERS)
The 2020 Fall Economic Statement announced the Canada Emergency Rent Subsidy (CERS) which is an extension of the Canada Emergency Commercial Rent Assistance (CECRA) to assist small businesses affected by COVID-19 with rent and mortgage support. This program is available retroactively to September 27th, 2020 and will continue until June 7th, 2021. The details outlined here will be in place until March 13th, 2021 with new information on periods after March 13th being announced at a later date.
Under the CERS, small businesses can receive up to 65% of lost revenues to assist with eligible expenses. Businesses that were temporarily shut down by a mandatory public health order will be able to receive an additional 25%, for a maximum of 90% of lost revenues.
Both renters and property owners can receive the CERS. To be eligible you must:
- Own or rent a property that is:
- Real or immovable (not for domestic purposes) and
- In Canada, used by your business for its ordinary activities
- Have eligible rent expenses totalling no more than $75,000 per location per period and $300,000 per entity per period
- Expenses are expected to be paid within 60 days of receiving your subsidy
- Expenses must be paid to an arms-length party
- Be an eligible entity such as an individual, taxable corporation or trust, registered charity, partnership of eligible employers, or non-profit organization
- Have experienced a revenue loss during a CERS claim period
- Have a payroll account as of March 15, 2020 (or have been using a payroll service provider) or have a business number as of September 27th, 2020
Business must be able to demonstrate their loss in revenues much the same as with the Canada Emergency Wage Subsidy (CEWS): by comparing their CERS period revenue to a baseline revenue of either your eligible business revenue for that same month in the previous year, or to the average eligible revenue for January and February 2020. There is no minimum revenue drop to be eligible.
To calculate the amount of CERS you can receive, first calculate your revenue loss for the period. The amount receivable is as follows:
- Up to 50% revenue loss – multiply your revenue loss by 0.8
- Between 50% and 70% revenue loss – 40% revenue loss plus 1.25 times the amount of loss above 50%
- 70% revenue loss or more – you will receive a 65% rent subsidy
- Businesses required to shut down – eligible for an additional 25%
Businesses can apply for this subsidy through the CRA MyBusiness Account. More information on whether you qualify as well as a subsidy calculator is provided by the CRA and can be found at the following site:
Canada Emergency Business Account (CEBA)
CEBA originally provided up to $40,000 in government-guaranteed loans for businesses to help pay operating expenses. This interest-free loan would see $10,000 forgiven if the balance is paid before December 31st, 2022. On October 6th, the Federal government announced that an additional $20,000 would be available, with a further $10,000 in forgiveness.
For those who have not applied for the CEBA loan, applications are currently available through financial institutions across Canada. Applicants must meet the following criteria:
- Have an active CRA Business Number (BN) with an effective date of registration on or prior to March 1, 2020.
- Employment income paid in the 2019 calendar year between $20,000 and $1,500,000 or,
- Have eligible non-deferrable expenses for 2020 between $40,000 and $1,500,000.
- Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance. Expenses will be subject to verification and audit by the Government of Canada.
If you qualified for the original $40,000 CEBA loan, you automatically qualify for the additional $20,000. If you have not done so already, we recommend that you apply for the additional CEBA amount online through your financial institution.
Details of the full CEBA loan ($60,000):
- 0% interest until December 31, 2022.
- Requires no principal payments until December 31, 2022.
- Principal payments can be made anytime.
- For your total loan (including the original advance) $20,000 loan forgiveness is available provided $40,000 is paid back prior to December 31, 2022
- No transaction or administration fees apply.
If you have any questions regarding these new programs, please do not hesitate to reach out to a TPC Financial Group advisor and we will be happy to discuss the specifics of your situation.