Concerns Among Retailers as Canada Emergency Commercial Rent Assistance Program Ends this Week

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The Canada Emergency Commercial Rent Assistance program is scheduled to come to an end on Friday and groups across Canada are urging the federal government to continue the initiative but to also improve it so it can help more small businesses struggling to survive through the COVID-19 pandemic.

RENT RELIEF REMAINS CRITICAL FOR CANADIAN SMALL BUSINESSES AS CECRA COMES TO AN END

According to the Canadian Federation of Independent Business, a survey indicates one in three small businesses say rent relief remains a critical missing piece for their recovery.

“Three months into the launch of the program, it is now abundantly clear that while CECRA has helped some, it has left many more stranded without relief. How is it fair that the dry cleaner on one side of the street will survive because their landlord is using CECRA and the one on the other side will go under because they can’t access the program? Another problem is the bar to access the program is extraordinarily high even with a willing landlord,” said Laura Jones, Executive Vice-President at CFIB.

“We need provincial finance ministers to help Ottawa fix this, now. Waiting to see if more landlords apply for CECRA by the application deadline would be a big mistake not in keeping with sensible recovery plans. Rent relief needs an overhaul now to ensure a successful economic recovery for the small business community.”

The CFIB said federal government records show that less than 10 percent of the funding committed to CECRA has been spent to help 29,000 small business tenants. An additional 25,000 applications are predicted before the submission deadline at the end of August (program ends in July, but applications are open until the end of August), which still leaves the program underutilized.

CFIB IS ENCOURAGING PROVINCIAL GOVERNMENTS TO WORK WITH THE FEDERAL GOVERNMENT TO AID SMALL BUSINESSES AMID COVID-19

The CFIB is recommending provincial governments work with the federal government to allow tenants to directly apply for and access CECRA funding. CFIB has also recommended the forgivable portion of the Canada Emergency Business Account be expanded as an alternative way to provide rent relief.

In an open letter to Canada’s Finance Ministers, the CFIB said there is an urgent need to fix rent relief for small business owners across Canada.

“On behalf of the businesses that have been left out of a program that can make or break their future, we are urging you to fix this by repurposing the money left in the CECRA budget to get help directly to tenants. One in three businesses say rent relief remains a critical missing piece for their recovery—a failure to address this would represent a serious failure in any economic recovery plan,” said the letter.

“Rent relief needs an overhaul now. Ideally, provincial and federal finance ministers should work together to fix CECRA by establishing an alternative way to get rent relief money directly to tenants who need it. However, if this is not possible to do quickly, CFIB urges provincial governments to immediately pull their portion of CECRA funding and redirect those funds to directly support small business tenants that have not been able to access the program. This pivot to assist local businesses that have been denied access to rent relief is critical to economic recovery.”

David Lefebvre, Restaurants Canada Vice President, Federal and Quebec, said CECRA has been beneficial for some restaurants who were able to access that support over the past few months.

“For those participating in the program, this could make the difference between being viable and being able to remain open and having to close,” he said.

“At this point from the conversations we’ve had with the government it seems right now the only possibility is an extension. There’s no indication in the short term that there will be major changes to the program but they’ve been open to extending it for a few more months like they did with the wage subsidy. But in the wage subsidy you had some positive changes in the program.

“Also at this point being in the middle of the summer, there’s not a lot of movement in terms of the government.”

The main thing Restaurants Canada has been asking from the beginning is for the program to be better for tenants, explained Lefebrve.

“Right now the landlord has a veto right to enter or not to enter into an agreement under the CECRA program. This is definitely a problem. We’d like to have something like if a tenant fulfills some kind of checklist they could force an agreement on the landlords under the program,” he said. “This is something we’d like to see – some way to make it compulsory for landlords to participate in the program.

“We’d also like to see applications to be more streamlined and easier to do for operators.”

RETAIL COUNCIL OF CANADA SAYS CECRA IS TOO COMPLICATED

The Retail Council of Canada said CECRA is too complicated, too restrictive with the threshold for revenue loss for tenants too high at 70 percent, and it is voluntary, requiring landlords to apply on behalf of tenants which it appears was not successful based on the lack of pick up.

“There’s been a challenge with the program from the get-go with respect to landlord participation,” said Karl Littler, Senior Vice President, Public Affairs at the Retail Council of Canada. “The program is a weird one which is if you benefit from it, it’s a godsend right. And if you do not benefit from it, it’s utterly useless to you.”

Another issue with CECRA is that only small business tenants paying less than $50,000 per month in gross rent in a given location are eligible which leaves out many bigger retailers.

Jon Shell, Managing Director & Partner of Social Capital Partners in Toronto, and Co-Founder of Save Small Business, a grassroots coalition of small businesses across Canada, said the CECRA program doesn’t really do very much.

“Not very many people use it. I think for the very few businesses that have it you might as well extend it. It doesn’t cost very much money. So why not?,” said Shell.

“They don’t have any alternatives that they’ve proposed. I think not extending it is nonsense but even extending is not that important. It’s super important for the very few companies that get it but so few companies get it. It’s had almost no impact. We’d like it to be replaced with something useful.

“The government announced $3 billion for rent relief. I’m assuming that the reason they did that is because they thought rent relief was important and the $3 billion was the right amount of money to provide to small business in order to pay the rent. They have spent a fraction of that money. So the question is do they still believe that rent is important and if so what’s the plan with all the money. Our suggestion is creating a simpler mechanism to deliver that money directly to tenants as opposed to going through the landlords.”

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