Want to apply for the new coronavirus rent subsidy program? Here’s what to know

Click to play video: 'Coronavirus: Federal government announces new rent subsidy support for small businesses'
Coronavirus: Federal government announces new rent subsidy support for small businesses
Deputy Prime Minister Chrystia Freeland announced on Monday a new federal rent subsidy support to small businesses affected by lockdowns and public health orders. – Nov 23, 2020

If the small glimmer of hope offered by news of encouraging developments in the quest for a coronavirus vaccine makes it feels like things could be back to normal soon, remember: anything remotely resembling normal is still a very long way off.

Tens of thousands of Canadian small businesses have been forced to shut their doors over the last 10 months as the economic trainwreck that is 2020 continues to batter consumers and entrepreneurs alike.

It’s that reality that Deputy Prime Minister Chrystia Freeland on Monday said underlines the federal government’s new rent subsidy program — applications for which are now open — as the country prepares to batten down the hatches for a long, difficult winter ahead.

“It would be so tragic for any viable charity, businesses, non-profit to make its way through the pandemic only to falter now that the end is in sight,” she told journalists on Monday.

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“This support is here now to prevent that from happening.”

If rent support sounds familiar, that’s because this is the government’s second kick at the can.

The Canada Emergency Rent Subsidy, rolling out on Monday, is replacing the original model for rent subsidies that was announced at the beginning of the pandemic.

The older model — Canada Emergency Commercial Rent Assistance — gave loans to landlords with the goal of getting them to reduce rent for their small business tenants by up to 75 per cent.

However, getting landlords to apply for the program proved challenging, and many small businesses cited problems getting access to the support available because their landlords were reluctant.

Now, small business owners can apply directly for the Canada Emergency Rent Subsidy as well as for an additional stream of support if they are directly impacted by a lockdown order.

Here’s how the new program works.

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Rent subsidy is tiered like the wage subsidy

Business owners who have applied for the Canada Emergency Wage Subsidy will likely find the new process similar: the subsidy structure is tiered based on a scale of how much your revenue has dropped because of the coronavirus pandemic.

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A revenue drop of 70 per cent or more — calculated the same way as with the wage subsidy — will let a business, registered charity or non-profit qualify for a subsidy of 65 per cent on its eligible expenses.

A revenue drop of between 50 and 69 per cent would yield a subsidy of 40 per cent, while any eligible entity with revenue drops of below 50 per cent would get gradually decreasing levels of subsidy.

In effect, those who see very little revenue drop will qualify for very little rent assistance, while those hit hardest will qualify for the most.

Each location of an eligible entity will be capped at $75,000 in subsidies.

Entities with more than one location will be capped at $300,000 in subsidies between all the locations.

The expenses eligible for the subsidy include commercial rent, property taxes, property insurance and some interest on commercial mortgages.

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Sales tax on any of those expenses will not be eligible, nor will any payments on residential or recreational property owned by the applicant.

“Mortgage interest expenses in respect of a property primarily used to earn, directly or indirectly, rental income from arms-length entities would not be eligible,” the program website adds.

What about lockdown support?

The rental subsidy also includes a top-up for entities that are directly hit by temporary restrictions forcing them into lockdown as premiers and health officials fight to limit the spread of the virus.

In addition to the rental subsidy, the program also offers more help for eligible entities “that are subject to a lockdown and must shut their doors or significantly limit their activities under a public health order issued under the laws of Canada, a province or territory.”

Those include shutdown orders from municipal or regional health authorities, or a shutdown at a location because of an outbreak of COVID-19 “as declared by a provincial, territorial or regional health authority.”

The lockdown support would net eligible entities an extra 25 per cent regardless of whether their revenue has dropped by one per cent or more than 70 per cent, so long as they qualify for the base Canada Emergency Rent Subsidy and are impacted by a valid public health order.

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There are a number of notable exclusions to the eligibility here.

For example, bars having to shut down early in keeping with curfews, restaurants having to limit the number of people allowed per table for indoor dining, bed and breakfasts seeing a drop in clients, or businesses otherwise forced to limit their number of clients would not qualify.

Those businesses shut down for violating public health restrictions also wouldn’t qualify.

Those that would qualify include restaurants that normally earn 25 more cent or more of their revenues from indoor dining but that are subject to bans on indoor dining, bars that have been ordered to close, fitness centres that are ordered to close, and retail stores shut down in shopping malls.

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Theatres and interactive museums ordered to shut down would qualify, as would personal service providers like estheticians if their services cannot be done while wearing masks.

Another example of an eligible entity would be a soup kitchen forced to shut down after some of its staff get diagnosed with COVID-19.

Who is eligible for rent subsidies?

Eligibility largely mirrors the wage subsidy program.

That means in individuals, taxable corporations and trusts, non-profit organizations and registered charities are all eligible for the rental subsidy under the new program.

As well, registered Canadian amateur athletic associations, registered journalism organizations, arts schools, driving schools, language and flight schools, Indigenous government-owned corporations and partnerships are also eligible.

Partnerships where up to 50 per cent is owned by a non-eligible entity are also eligible.

In order to apply, entities must have either a Canada Revenue Agency payroll account as of March 15, 2020, or have a business number as of Sept. 27, 2020, and be able to satisfy the CRA that they are making a legitimate claim.

The program will be open until June 2021.

It is also retroactive to Sept. 27.

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