Small businesses face rent issues
After nine years in business, Charlottetown's Stefany MacKeen made a heartfelt April 26 announcement on Facebook that her business - Platinum Esthetics & Hair Salon - was closing for good at the end of that month.
"I went through a lot of emotions before I posted that. And, as soon as I hit 'post,' it was hard to hold back the tears," she said on Thursday.
Being forced to shut down on March 17 due to COVID19, and her landlord's unwillingness to participate in rent assistance programs - both federal and provincial - were cited as reasons for the difficult decision.
"I never thought that when someone was drowning, someone would look the other way and not take the help when it was made available," MacKeen said.
Fortunately, MacKeen was able to find workspace at Mane Connection salon in Charlottetown at 18 Garfield St. near the P.E.I. Brewing Company, but the new space is smaller than Eden Street. Even so, with salons being part of the province's latest phase of re-openings on June 1, she's back at work as an esthetician.
Some other business in the Eden Street plaza were able to stay open during COVID19. But that was not an option for salons, so she had to lay off all of her staff and had no revenue. She brought up the province's rent deferral program with her landlord as an option to help her get by while closed to the public, but he refused to participate. And then, with her lease set to expire on May 1, she was presented with a new lease and a rent increase. Then, she found a "spark of hope" when the Canada Emergency Commercial Rent Assistance (CECRA) was announced, but once again, her landlord refused to participate.
MacKeen's former landlord on Eden Street declined to comment for this story.
PROGRAM
The CECRA program was announced on April 24, and applications opened on May 25. The program involves a forgivable loan to eligible commercial property owners that covers 50 per cent of rent for April, May and June for small businesses that are experiencing COVID-19 related hardships. In order 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. The remaining half is covered by the government's forgivable loan. The landlord must also agree not to evict the tenant while the agreement is in place. 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-percent decrease in revenues compared to pre-COVID-19 business.
Louis-Philippe Gauthier, the Canadian Federation of Independent Business's (CFIB) provincial director for Prince Edward Island (and New Brunswick), said the CECRA program isn't serving the needs of either landlords or business owner tenants. In fact, the CFIB's most recent member survey showed that only 12 per cent of landlords nationally are participating in the program. Only about 16,000 applications had been received since May, which is low considering there are about 1.2 million small businesses in Canada, he said. Gauthier added that the application process needs to be simplified and the program needs to be extended beyond June. As well, the 70-per-cent revenue loss criteria needs to be lowered. He would also like the program changed so tenants can receive funding in cases when landlords are unwilling to participate.
MacKeen said that support for businesses is crucial, especially with all the uncertainty about the future, including the possibility that a second wave of COVID19
could hit in the fall and another shutdown happens. Even so, for MacKeen, it's nice to be back at work and connect with her customers again.
"All of our clients are happy. They're just happy that we're able to offer our services," she said. "It was so nice to see everybody."
The takeaway from the past couple of months is to recognize that we're all having a hard time, and it's important to help as many people as we can, she said.
"I think if we can help somebody, we should do it."