Rent program leaving many out
Some small businesses fear eviction
OTTAWA • Small businesses facing May rent without the means to pay it are worried the government’s commercial rent subsidy program won’t help them avoid an eviction.
Ottawa announced a commercial rent subsidy program last week, meant to help small businesses weather the COVID-19 crisis.
Under the program, the federal and provincial governments will cover 50 per cent of a small business’ rent through a forgivable loan to commercial landlords. The loan remains forgivable as long as the landlord pledges to drop the tenants rent by at least 75 per cent. Tenants are then expected to pay the remaining 25 per cent.
The fine print of the program includes two caveats that small businesses are worried they can’t clear. The first requirement is that tenants have to have seen a revenue drop of at least 70 per cent, much higher than the government’s wage subsidy program, which required a 30 per cent drop.
Commercial landlords will be the applicants to the program and under the terms they have to have a mortgage on their property.
Laura Jones, executive vice- president with the Canadian Federation of Independent Businesses, said because the program runs through landlords it could mean evictions for tenants.
“We know that some landlords are already saying they’re not going to participate, which leaves tenants powerless.”
She said some of the federation’s members have said they don’t have a good relationship with their landlords or don’t expect them to apply to the program. She said the revenue drop is a particular problem for businesses, noting a business that lost half of its revenue would not be able to qualify for the program. She said many have told her organization they won’t be able to participate even if their landlord is on board.
“About a third of our business owners are saying they need the help and they don’t qualify because of the revenue drop,” she said
The CFIB has done broader surveys of its members and found 55 per cent are concerned they won’t be able to pay their May rent in full.
Treasury Board president Jean-yves Duclos said the rules around the program were the product of negotiations with provincial governments and this is what all sides could agree to.
“We came to a quick agreement with provinces and territories on the best way to join forces and support businesses and small businesses in particular,” he said.
He said the program is just part of the government’s efforts. “This is a part of a broad package to support the economy and most importantly our workers.”
Duclos said there are limits to what the government can do in this circumstance and some restrictions had to be put in place. He said it was also important to have banks involved.
“That ongoing work will require the collaboration of the banking sector, because it has been identified as key in supporting owners and renters.”
NDP MP Gord Johns said there are still far too many unknowns about the program and it is going to cost businesses that are desperate.
“The government has still not provided a lot of answers to the help they’re offering and concerns around their rollout and there are huge gaps,” Johns said.
Applications for the program are not yet available and Johns said he doesn’t understand why the government didn’t get provinces to agree to a moratorium on evictions until the details could be worked out.
He said many landlords might simply not participate and that will cost Canada small- business owners who support their communities and employ millions of people.
“They are being penalized by the landlords’ decision and literally tomorrow is the cliff. These businesses are hanging on the edge of a cliff,” he said. “We are on the verge of the biggest collapse potentially of small businesses across this country.”
Jones said she doesn’t expect a redesign of the program. She said the federal government has done a lot of the work in this crisis and provinces could step in and help.
“It is very hard to design a federal program that is going to fit every scenario,” she said. “I think the federal government is hoping this will work and I think the provinces are overdue to come to the table on this.”
Canada Mortgage and Housing Corp. is administering the program, but has not yet put an application form on its website.