Confusion, Frustration For N.S. Businesses Seeking Federal Rent Relief
HALIFAX — “It was just, one day we were making money and the next day we were not. We were just paying rent.”
Jon Foster own several fitness facilities in the Annapolis Valley, including Abhaya Mixed Martial Arts and Motiv Fitness.
When the Covid-19 pandemic arrived in Nova Scotia he had to shutter his gyms and lay off his employees. His profits essentially disappeared overnight, he says, but he still had to keep paying his bills.
He’s been able to take advantage of some government loans and deferral programs, and they help a little, but by far his biggest and most daunting expense is rent.
And trying to get help with that has been “frankly kind of horse shit.”
Forced To Rely On Landlords
Foster’s monthly rent at just one of his businesses is close to $10,000 a month. With the help of the Nova Scotia government’s rent deferral program, he’s had that temporarily cut to about $6,000 a month.
However, the Nova Scotia program is a rent deferral, not rent relief, so he will have to start paying back the extra money as soon as the program ends.
But even until that happens, he says, “I’m still paying $6,000 a month for nothing.”
In April, the federal government announced a relief program for businesses like Fosters, promising to temporarily cover 75 percent of their rent.
But Foster says the Canada Emergency Commercial Rent Assistance program has so far been little more than a joke.
Business advocacy groups have repeatedly warned that making rent is the biggest challenge for small business owners. However, CECRA appears to be missing the mark on several fronts.
Foster was forced to shut his doors on March 18; requirements for CECRA were only released May 25. But Foster says the nearly three-month lag time is the least of his worries.
The biggest problem, he says, is that only landlords — not tenants — are allowed to apply for the program. He has no control over when, how, or even if his landlord does.
“They left [the application process] in the hands of the landlords, so now [my rent relief] if up to these commercial realtors who don’t give a fiddling fuck, really, about their tenants,” Foster says.
He doesn’t believe commercial landlords have an incentive to apply for the program since it requires those landlords cover 25 percent of the 75 percent discount themselves.
Why would they do that, Foster says, if they’re already getting 100 percent of the rent now, without having to offer any discounts?
“It’s ridiculous that the tenants aren’t the ones applying for this rent relief. Because we’re the ones paying the bills and we’re the ones that need the help, not the landlords,” he says.
Foster says the process is so bad that he doesn’t even know if his landlords have applied for the program yet, or whether they will at all.
Federal Rent Relief ‘A Mess’
Foster’s experience is not unique. The Canadian Federation of Independent Businesses this week had harsh words for the federal government about the program.
“Rent relief is a mess that needs a major clean-up,” Laura Jones, CFIB’s executive vice-president said earlier this week.
“Without resorting to swearing, I can’t emphasize strongly enough how important it is to fix CECRA and put in place a decent safety net for tenants whose landlords won’t use it. This cannot wait until July 1. We don’t want to see a good chunk of Main Street going down over the ineffective execution of a well-intentioned program.”
CFIB says small businesses across the country are going into their third month with low or zero revenues and most have still not seen any help from the program.
Along with the problem of tenants not being allowed to apply for the program, the CFIB says both tenants and landlords are frustrated with the application process.
The organization claims it’s unclear how much financial information applicants need to provide, that there have been technical difficulties with the application portal, and that some forms are needlessly complex.
The CFIB has asked the federal government to give tenants direct access to CECRA, rather than leaving application entirely in the hands of landlords. It’s also demanding the government simplify the application process, expand the program beyond three months, relax the qualifications, and temporarily ban commercial landlords from evicting their tenants.
“Workable rent relief is make or break for over half of the small businesses we surveyed and governments need to make this a top priority yesterday,” Jones said.
Business Debt Still Piling Up
Foster agrees, and government rent relief could have a huge impact on his businesses.
The Nova Scotia government has said fitness facilities can reopen on June 5, but as of June 3, Foster was still unsure exactly what reopening will look like at some of his facilities. He couldn’t’ say for sure whether or not he would even be able to open.
He says he had almost 1,000 members when he was forced to shut down and he has no idea what that number will be when finally opens his doors.
“Everyone that’s been a member while we’ve been [closed] I owe two and a half months of free time. They’re not going to be re-upping until the fall,” he says.
That’s going to mean operating on significantly less revenue.
Meanwhile, he’s still expected to shell out thousands of dollars in rent payments for space he can’t use — and his rent will actually be higher than it was pre-Covid-19 once Nova Scotia’s rent deferral program ends.
“I mean, come on. I’ve already spent $12,000 — and that’s just one location,” he says. At another one of his facilities, he says he “just [has] a stack of bills. There’s no relief there.”
“But none of that is being taken into consideration. We don’t get to reopen until June but we somehow need to make money to pay all this back without being open. It’s ridiculous,” he says.