National Post (National Edition)
RENT RELIEF COMING FOR SMALL BUSINESS
GROUPS AWAITING DETAILS FROM GOVERNMENT
A closed store front boutique business pleads for help displaying a sign in Toronto on Thursday.
Prime Minister Justin Trudeau says the federal government is expanding a loan program for small businesses suffering
from the COVID-19 pandemic and is working on new support for companies having trouble paying rent.
TORONTO • Rent relief is the next target of government programs aimed at keeping small and medium-sized businesses afloat during the coronavirus pandemic, Prime Minister Justin Trudeau said Thursday.
Ottawa is understood to be contemplating a program that would include loans for commercial landlords who would, in turn, reduce or waive rents from small businesses for a period extending from April through June. However, details have not been hammered out and must be done in consultation with the provinces, which have responsibility for landlord-tenant relationships.
Economists say commercial rent relief would boost the effectiveness of other aid programs, such as wage subsidies and emergency loans, the latter of which was expanded by Ottawa on Thursday to include both smaller and larger firms.
As business groups await details of Trudeau’s rent relief plan, they are pushing to have the programs include rent reduction and elimination, rather than just deferral. Many firms are concerned that rent deferrals would simply push the prospect of bankruptcy down the road, leaving businesses to confront a pile of bills when they are finally allowed to reopen and may have limited revenues.
“While rent deferral policies may be useful in the short term — as the goal is to keep businesses in place so they can reopen after months of no revenue — a large rent deferral bill will force a business to close their doors for good,” said Rocco Rossi, CEO of the Ontario Chamber of Commerce, on Thursday.
The chamber endorsed a “save Main Street” initiative proposed by the Ontario NDP, which includes a 75-per-cent commercial rent subsidy of up to $10,000 a month over three months. Other suggestions include giving landlords access to small-business aid packages so they are better able to cancel or defer rents, and encouraging corporate landlords to set up relief funds for commercial tenants.
Commercial rent is the second-largest expense for small and medium-sized businesses, after wages, and is the most important fixed cost, according to the Canadian Federation of Independent Business. CFIB says 80 per cent of small businesses are completely or partially shutdown in order to stop the spread of COVID-19, and the average small business owner pays $10,000 in commercial rent.
“These bills have not stopped,” CFIB said Thursday, noting rent relief had nonetheless been “left out” of government relief programs announced since the shutdown began in March.
“We are counting on the federal and provincial governments and landlords to work closely together to ensure the relief gets to the small business tenant,” said Dan Kelly, CFIB president. “It is in everyone’s interest to ensure this important support is simple, flexible and fast.”
As Trudeau committed to rolling out rent relief measures for small business, he also announced the Canada Emergency Business Account program — which provides up to $40,000 in urgent loans to business — would be broadened to include businesses with annual payrolls of as little as $20,000 and as much as $1.5 million. The initial range was between $50,000 and $1 million.
Economist Benjamin Tal at CIBC said this week that businesses appear to the tapping CEBA funds to pay rent, drawing those funds away from other costs, such as wages, which are important to keep businesses operating after restrictions are lifted.
“A rent solution is what’s needed to keep these businesses in place during the shutdown so that they are ready to unlock the door and reopen when that’s permitted,” Tal wrote