Trudeau Announces A 75 Percent Rent Break For Small Businesses
OTTAWA – Prime Minister Justin Trudeau announced Friday a new program that will help businesses affected by the COVID-19 pandemic pay their rent.
“If you’ve had to close up shop because of public health recommendations, if you don’t have a lot of money coming in because people aren’t spending as much these days, you may be worried about losing your office space or not having a coffee shop to reopen after this crisis,” Trudeau said as he announced the Canada Emergency Commercial Rent Assistance program.
According to the Prime Minister, the program will cover 75 percent of small businesses’ rent for the months of April, May, and June.
It will work by giving non-repayable loans directly to commercial landlords who will then be expected to give their tenants a break on rent.
Trudeau said the government loans will cover 50 percent of a businesses’ rent, while the landlord will cover an additional 25 percent.
If the landlords who receive the loan cut their tenants rent by at least 75 percent—and promise not to evict them—the landlords won’t have to pay back the loan.
The program is available for business tenants who pay less than $50,000 a month in rent. Businesses also must have seen their revenue drop by at least 70 percent or been forced to close entirely, as a result of COVID-19.
Trudeau said the while the Canada Emergency Commercial Rent Assistance program is designed to help small businesses, rent relief for charities and larger businesses is on the way.
“We will also be there for non-profits and charitable organizations that are struggling right now. We’ll also have more to say in the coming days about rent support for larger businesses,” he said.
The federal government’s rent relief program addresses what’s becomes a key concern for small businesses.
Last week, the Chamber of Commerce of Greater Moncton CEO John Wishart told Huddle that fixed costs like rent are one of their biggest worries.
“The biggest fixed-cost is usually their rent if they don’t own the building. And if they own the building, it’s probably their mortgage. So we’re hearing more and more now from our members that that’s the thing that could tip them off the edge in terms of staying in business or not being able to recover,” he said.
He explained that previous government programs offering deferrals or loans were useful in some cases, but still required businesses to eventually pay everything back despite the fact that they’ve missed out on significant revenue.
Today, the Canadian Federation of Independent Businesses echoed Wishart, saying in a statement it was happy to see the government announce rent forgiveness rather than just loans or deferrals.
“The Canada Emergency Commercial Rent Assistance program gets several things right – it is significant relief-removing 75 percent of the cost of rent for 3 months-and includes April,” CFIB president Dan Kelley said.
However, the organization does have some concerns, including that the program “may be too complicated and too reliant on landlords to administer.”
The group said that landlord may choose to ignore the program “even if their tenants badly need it,” because through it they have to accept some losses.
“Another concern is that the all-or-nothing threshold of a 70 percent revenue reduction will leave many hard-hit businesses without the relief they need,” the group said.