CFIB says rent support needed
The Canadian Federation of Independent Business says the federal government should have done more to help small businesses with making their rent.
But at least the government has settled on a date for landlords and tenants to apply for the Canada Emergency Commercial Rent Assistance (CECRA) program, says Louis-Philippe Gauthier, CFIB's provincial director for Prince Edward Island (and New Brunswick).
"We still have a high level of members that they are very concerned about being able to make the rent for June," he said.
"Rent is a fixed cost. You've got to pay it regardless of if you make money or not."
On Wednesday, the federal government announced that applications for the CECRA program will begin on May 25.
The program, which was first announced on April 24, provides a forgivable loan to eligible commercial property owners, whether they have a mortgage or not, that covers 50 per cent of rent for three months for small businesses that are experiencing COVID19 related hardships in April, May and June.
To receive the loan, the landlord must agree to reduce the monthly rent by a minimum of 75 per cent and the tenant must agree to pay up to 25 per cent. This means that the landlord and the tenant split half of the rent with each paying 25 per cent while the remaining half is covered by the government's forgivable loan to the landlord. The landlord also has to agree not to evict the tenant while the agreement is in place.
The rent for April and May would be paid retroactively, according to a federal government press release.
Small businesses are eligible if they pay less than $50,000 per month in gross rent, have annual revenues less than $20 million, and have had at least a 70-per-cent decrease in revenues compared to preCOVID-19 business.
Gauthier said the CFIB wants tenants to be able to receive the rent funding when landlords have no plans to apply for the program. He also wants to see eligibility expanded beyond the 70-percent drop in revenue requirement.
The Canada Mortgage and Housing Corporation's (CMHC) website encourages landlords to apply and participate in the program, explaining that if the tenant declares bankruptcy and is evicted, the landlord gets nothing in terms of rental income while continuing to pay the mortgage, debt and other costs. The CMHC website lists other incentives for landlords to participate, such as avoiding the costs and hassle of finding new tenants if eviction occurs and the possibility of having to rent to new tenants at a lower price post-COVID-19.
The CFIB's national membership also includes commercial property owners. Gauthier said only 22 per cent of commercial property owner members said they would use the CECRA program while 51 per cent said they wouldn't use the program. Twenty-seven per cent said they didn't know.
"That's why the CFIB has been advocating for the federal government to flip the program around. If the landlord does not want to participate, then those funds should be made available to the lessee so that the support is available to them," Gauthier said. Now that an application date and details of the program are available on the CMHC's website, Gauthier said he hopes to see more landlords participate, especially as small businesses try to figure out what the economy is going to look like once they reopen.
"Half of (members) are saying they're having difficulty recalling staff that's been laid off or getting the hours they need from staff. That's another big consideration," he said.
"So, when you look at all of it, it's a lot of uncertainty and harsh reality for business owners when you lay on all the considerations relating to reduced consumer spending, cash flow issues, paying the rent, and bringing back their staff as the economies progressively start reopening."
The assistance plan was first announced on April 24.
More information, including application details, can be found on the CMHC's website at www.cmhc-schl.gc.ca/ en/finance-and-investing/ covid19-cecra-small-business.