Do Businesses Need Better Access to Rent Subsidies?

By Randall Orser | Business

Though the emergency wage subsidies that the Government of Canada put in place have been reasonably successful according to Laura Jones the executive vice-president and chief strategic officer of the Canadian Federation of Independent Business the Canada Emergency Commercial Rent Assistance Program has been a failure.

When tens of thousands of businesses were forced to shut down at the start of the pandemic many of these were immediately unable to pay their rent.  Though most financial experts recommend having at least a three month rainy day fund most businesses did not have that luxury before the crisis and and definitely do not now after an extended period of lost revenue and reduced operating hours.  Now so far into the pandemic even the most established businesses have drained their rainy day funds.  Back in June a survey showed that 50% of business owners could not make their rent without government help and 22% feared eviction.

Financial experts do not see an improvement in the situation going into 2021 so government relief programs will be of the highest important to support small businesses.   The Canada Emergency Commercial Rent Assistance (CECRA) program has been a failure even though on paper it looked like a good idea.  Tenants would get a 75% break on their rent with provincial and federal governments kicking in 50% that is paid to the landlord with the landlord agreeing to take a 25% reduction in the total rent, in this way the burden would be shared.

There were two problems with this program, firstly the landlord has to agree to participate but many landlords want full rent so have not signed up.  Secondly only businesses who have suffered a 70% loss of revenue are eligible, this high amount means that many businesses are not eligible.  From this information it is not surprising that the finance department only spent less than 10% of it's committed funding on the CECRA program.  

Now that the CECRA has ended it is hoped that the a new commercial rent relief program will be rolled out that will allow tenants to access the 50% of government provided rent relief with or without the participation of their landlord and reducing the 70% loss of monthly revenue eligibility to something more reasonable.  As we are now in the second wave of the pandemic these changes are needed for the present and the foreseeable future.

From an article by Ali Amad

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