Trudeau Announces Plan To Provide Rent Relief To Businesses
OTTAWA – Prime Minister Justin Trudeau has announced a plan to introduce a program aimed at helping businesses and commercial property owners with rent.
In his daily update to press on Thursday, he said the federal government plans to introduce the Canada Emergency Commercial Rent Assistance.
“This program will provide support to help small businesses with their rent for the months of April, May and June. To implement this program, we have to work with the provinces and territories as they govern rental relationships and we hope to have more details to share very soon,” he said.
The government has also expanded the eligibility threshold of the Canada Emergency Business Account. Now, businesses that spent between $20,000 and $1.5 million in total payroll in 2019 will be eligible to receive a loan through the program.
“This is money entrepreneurs and employers can use to cover operational costs and help with other immediate needs,” he said.
Small Businesses Call For Rent Relief
Rent support is critical for small business owners, says Kathy Guitard, who has been running a Sky Zone trampoline park across from Champlain Place in Dieppe for more than three years.
Normally, the business has between 35 and 55 employees – higher during peak times. Being the only Sky Zone location east of Montreal means the business caters not only to locals, but also to tourists.
These days, because of COVID-19, the facility is closed to the public and most staff members have been laid off. But the bill for rent for the 24,000-square-foot facility keeps coming, despite a lack of revenue. If relief doesn’t come soon, she’d have no choice but to take out a loan to help pay for rent.
“That just stacks more debt for the company. It’s not the ideal way to get a company through these times,” she said. “We’re doing everything we can to minimize our expenses during this time.”
Guitard has been vocal about her challenges, posting videos on social media and sending them to some government representatives. She says it’s because so many other small- and medium-sized businesses across New Brunswick and Canada, from restaurants to hair salons to bike shops, face the same issues. Landlords are also in a tough spot, and they need help too, she said.
“A month or two might not be as bad, but if this carries on for six months for example…I don’t know a lot of small and medium-sized companies that can pay six months rent [without revenue] and stack that against the company,” she said.
Guitard is waiting for approval on her application for the federal government’s wage subsidy program and low-interest loan, but that help is limited. She echoes other businesses in saying that rent deferral programs, like the ones now in place in Nova Scotia and P.E.I., are of little help because they will just add debt to small businesses that don’t have the same reserves as large corporations.
“What needs to happen in my opinion, is rent relief,” she said. “If we can get some rent forgiveness out there just to help bridge this gap, then that will allow companies to still be in a reasonable condition coming out of this.”
She says small and medium-sized businesses need help because they’re “the backbone” of the economy and are, collectively, a large employer.
“Rebuilding us and helping us to stay afloat allows almost like a stepping stone for the economy. If our employees come back and have jobs in good companies, then they’re able to generate their income and spend in the general economy,” she said.
Largest Fixed Cost Is Rent
John Wishart, the CEO of the Chamber of Commerce of Greater Moncton, said government programs that have been rolled out to help businesses pay wages, access no-interest or low-interest loans, and provide some basic income to people, have been good. But fixed costs, including rent, is a big issue that needs to be addressed.
“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.
The chambers of commerce in Moncton, Fredericton and Saint John had sent a joint letter about 10 days ago to the provincial government asking for a rent deferral program similar to those in Nova Scotia and P.E.I. But since businesses have told them deferrals are not enough, the chambers have sent another letter this week urging the government to launch a rent subsidy program.
Wishart said businesses are faced with the choice of having to take out a large loan or close.
“It’s that kind of situation that we’re hoping the government can address,” he told Huddle on Tuesday. “Today’s letter was about an actual rent subsidy program not to cover all of the rent cost, but even a percentage, to give most of the businesses a break.”
On a webinar offered by the Moncton chamber Tuesday morning, Federal Minister of Economic Development and Official Languages Melanie Joly suggested businesses push for rent relief programs at the provincial level. Only hours later, the Prime Minister hinted at a federal plan coming “very soon.”
That announcement came Thursday.
Both Wishart and Guitard said the federal government definitely has a role to play.
“I think it needs to be a joint initiative,” Wishart said. “To really make it effective, maybe both federal and provincial governments can share some of the burden so all the financial pressure isn’t on one level.”
Guitard is hoping relief comes soon for her company and other small and medium-sized businesses, as well as landlords. She suggests a program that looks at the size of a company, rent-to-sales values, the size of the market, and the length of time a company has been in business, among other criteria.
“We need significant rent support….rents are not cheap these days. You’ve got taxes. You’ve got all of these costs related to operating properties that landlords have to offset. So whatever they incur, we incur,” she said.
“This is critical for all of our small businesses … We’re all in this together. We need all of our small businesses operating. None of us wanted this but we’ve got to find a solution.”
Economy Won’t Re-open For Many Weeks
In the meantime, the Prime Minister says although conversations are ongoing with provinces about how the economy may be re-opened and different parts of the country experience varied numbers of cases, talks about “actually doing anything to re-open the economy” are still many weeks away.
“We will, hopefully, in the coming time, be able to loosen certain restrictions,” he said, adding that it has “to be done at the right moment and very, very carefully.”
Talks about “getting back to normal” won’t happen until there is a vaccine and massive amounts of testing, he said Thursday.
“It will be absolutely disastrous for us to open up to early or too quickly and have another wave hit us that could be just as bad as this one, and find ourselves in a situation of having to go back to quarantine the way we are right now, and have everything that we’ve done these past weeks be for nothing,” he said.
“I don’t think that we can talk about re-opening things until we are confident that we have exactly the plan in responding to future resurgences in place, and that’s what a lot of the conversations are going on right now.”