Small businesses push for rapid rent relief

Small businesses are hoping for promised rent relief from both landlords and government as the COVID-19-related shutdown drags on and their bills pile up.

The urgency comes as some landlords have already started issuing eviction notices for businesses that didn’t pay April rent, while those who were able to pay are stressed about the months to come.

“We don’t want to be closed, we’re forced to be closed ... but we’re still every single day racking up costs,” said Barb Bushe, who co-owns The Point of Light gift shop in Newmarket, Ont.

Prime Minister Justin Trudeau said Thursday his government is working on on a program to help businesses and commercial landlords cover their rents for at least three months.

Further details weren’t immediately available since the federal government will have to co-ordinate with provinces on the program.

Landlords, meanwhile, have generally offered short-term rent deferrals on an ad-hoc basis, but Bushe says she wants to see landlords share more of the burden that the mandated shutdowns have forced on the economy.

“It’s all kind of coming down on our backs ... you can’t push the debt down to the bottom (group) that have the least liquidity and not expect other players, mid-level players and large players, to really do their part.”

Bushe said she’s asked her landlord, Metrus Properties, for some level of rent forgiveness to share the burden. The company has so far offered a onemonth rent deferral, with interest of prime plus one per cent on the unpaid rent over the rest of the lease term.

Metrus did not respond to a request for comment.

Taking a deferral would mean Bushe takes on further debt at a time when there’s no clear picture of when the store will open, and what the economy will look like when that happens.

“No one imagines the economy is going to come roaring back,” she said. “And the money that you lose as you’re closed, that money’s lost for your year. It’s very hard to make it up again.”

A recently formed campaign called Save Small Business proposes that the federal government would compensate landlords for two-thirds of whatever rent discounts they give tenants for three months, so if a landlord cuts a tenant’s rent by $5,000 a month then the government would pay the landlord $3,300. The group suggests capping the payments at $6,000 a month and only offer it to tenants with less than $5 million in annual revenue.

The coalition says that its key criteria for any program are that it is rolled out fast, has broad eligibility, isn’t based on deferrals or debt, and national.

CIBC deputy chief economist Benjamin Tal has also called for direct government support for small businesses to avoid more job losses.

“Some sort of rent solution is essential to increase the effectiveness of other programs and limit the pace of increase in the unemployment rate,” he said in a note earlier this week.

Tal proposed the federal government follow a model put forward by the Rental-Housing Providers of Ontario, where tenants pay what they can and then the government pays the rest. The government then recoups the payments from tenants later on.

“That cost-sharing approach towards rent payment would go a long way to ease the financial pressure facing commercial tenants,” he said.

While Thursday’s announcement from federal government promises more support, its main relief programs so far are a $40,000 interest-free loan and 75 per cent wage subsidies, though it has also called on landlords to be accommodating.