As criticism of the government’s emergency loan program for small businesses known as Canada emergency business account (CEBA) mounts in some quarters, there are calls for other ways to combat the economic impact of COVID-19.
A push for grants and direct relief for expenses in this country is coming from small business associations and experts looking at aid packages that have been doled out in places like the U.K., Denmark and Australia.
Now, a new Canadian advocacy group called Save Small Business (SSB) says instead of emergency loans, the federal government needs to create an emergency commercial rent relief program.
“It’s unfair to close down local businesses and ask them to take out a loan in order to pay all their expenses,” said Jon Shell, the group’s co-founder.
“We have to share the burden of rent in a way so that the tenant isn’t the only one responsible.”
The Canadian Federation of Independent Business (CFIB) has called on provinces to provide rent subsidies for businesses devastated by the pandemic, also recommended hardship grants of $5,000 a month, like the program recently announced in Saskatchewan.
The SSB proposal for a national commercial rent abatement program delivered to Canada’s finance minister this past Friday goes farther, calling on Ottawa to kick in.
“We’ve had some estimates that said 10 per cent of local businesses are already permanently closed,” he said. “I think we’ll see widespread business closures by mid-May.”
Loans and subsidies
Founded in late March, SSB says it’s a coalition of 30,000 small businesses and individuals from across Canada, pushing for a wage subsidy and help with rent.
An emergency session of Parliament on Saturday passed legislation enacting the Canadian emergency wage subsidy program (CEWS).
On Friday, banks across the country began accepting applications for CEBA.
The $25-billion program offers government-backed loans of up to $40,000, interest-free until the end of 2022.
First announced in late March, it’s intended to help small businesses pay ongoing expenses like rent.
Many small businesses, however, have complained they don’t want more debt, while others are frustrated they don’t qualify to get a CEBA loan.
Finance Minister Bill Morneau did not immediately respond to requests for comment.
What is rent abatement and how would it work?
Shell’s group wants Ottawa to pay part of the rent for small businesses in five sectors: retail, full service restaurants, arts entertainment and recreation, health-care and social assistance.
Their proposal covers about 700,000 Canadian businesses and has four key elements.
First, the federal government should provide financial aid directly to participating landlords so they can reduce or waive rent for their tenants.
Second, the provinces must put a stop to commercial lease lockouts while this strategy is developed.
Third, that all levels of government pressure banks to defer property debt payments without accruing interest.
And fourth that all levels of government agree on a strategy to ease property tax and utility payments, ensuring savings are shared with tenants.
The concept is inspired by Australia, where the government is helping tenants and landlords on rent and mortgages.
The SSB plan has a few proposed restrictions, such as the tenant cannot have more $5-million in annual revenue.
Using Statistics Canada data to assess how many businesses could qualify, Shell’s group has estimated the total cost of between $1-$1.5 billion.
While laws about commercial rent are provincial territory, Shell believes the federal government should take the lead.
In his view, a national framework for how landlords and tenants should work together would ensure businesses across the country get the same chance to survive.
Who supports the rent abatement
According to Shell, senior officials in Ottawa told Save Small Business that “they are now considering several options for rent relief.”
CBC News asked Morneau’s office about that claim, but did not get a confirmation.
There is NDP support for commercial rent abatement; NDP Leader Jagmeet Singh brought it up in his address to parliament on Saturday.
“What we also need to do is put a pause on mortgages so we can work with provinces to put a pause on rent,” said Singh. “This should apply also for commercial rent, which would significantly help out small and medium sized businesses.”
The Conservatives have not made a statement about rent abatement, but do support other measures such as refunding GST remittances.
More than 26,000 businesses and 6,000 individuals have signed SSB’s petition in support of a federal commercial rent abatement strategy.
Other groups such as Restaurants Canada and Save Hospitality have pushed for commercial rent relief.
Landlords like Betty Rushon are on board as well; she owns a Victorian style building in downtown Sault St. Marie, Ont.
She’s about to lose all three of her retail tenants, a fruit basket shop, hair salon, and tattoo parlour. On a reduced rent, she’d still be able to pay her bills and keep them.
After her city spent years building a downtown scene, she’s worried “this one thing is going to wipe it all out” with closures.
Murtaza Haider, a professor at the Ted Rogers School of Management with Toronto’s Ryerson University, believes a rent relief plan will help tenants survive and landlords pay their mortgages.
“A collective collapse of small businesses across the nation would have a devastating impact on the labour force because they, at the end of the day, employ a sizable number of Canadians, especially in part time employment.”
Anxiety turning to anger over rent
With the CERB income replacement program up and running, and the CEWS wage subsidy program approved, some small businesses still feel like they are falling through the cracks.
Florist Sacha Thompson, owner of Vancouver’s The Flowerbox, is upset.
She agreed with closing her shop to help flatten the curve — a term used to describe the attempt to reduce the growth of new cases — but she is furious there are no options except for a CEBA loan to pay her rent.
On Twitter, Thompson declared: “I will not take on more debt. I just clawed my way mostly out of debt. But I will close and leave suppliers unpaid. .. lay off workers and desert a community I loved being a part of … Sad choice.”
The NDP, Conservative Party and CFIB are calling for the government to change CEBA loan criteria to cover more businesses.
Shell hopes the federal government will take charge, moving quickly past loans before thousands of local businesses close forever.
“The situation is dire.”