Canada’s new rent-relief program for small businesses is going to make a “huge difference,” says a downtown Victoria business owner.
Curtis Vertefeuille, owner of Moe’s Victoria home furnishing store on Fisgard Street, said he is thrilled with the new program, which will see rent drop by 75 per cent for qualifying businesses for three months. Businesses across all sectors have been suffering since the COVID-19 virus forced them to close their doors or drastically curtail operations.
A 75 per cent reduction is “crazy good,” Verteufeuille said Friday.
The new program, in partnerships with the province and territories that have jurisdiction over rents, is designed to assist businesses that are paying less than $50,000 per month in rent, have temporarily ceased operations, or have lost at least 70 per cent of pre-virus revenues. Charities and non-profits can be covered as well.
“That is massive for every business owner to get that relief,” Vertefeuille said.
Business groups locally and nationally have been calling on senior governments to assist with rent relief.
Catherine Holt, Greater Victoria Chamber of Commerce chief executive, said the new program is a step in the right direction. “There are still questions about this program and we want to make sure it works for all businesses at risk,” she said.
The longer it takes to get financial relief, the less likely they are to make it through to recovery, she said.
According to Small Business Profile, a publication issued by the provincial government, 98 per cent of the 517,100 businesses in the province are categorized as small businesses, with up to 49 employees. Of those small businesses, 428,400 have four or fewer employees.
“Certainly this is a big improvement for many of our businesses, to be able to feel that they will come out the other end now because a big chunk of their fixed cost is going to be covered,” said Jeff Jeff Bray, executive director of the Downtown Victoria Business Association, with 1,500 members.
Canada Emergency Commercial Rent Assistance will provide forgivable loans to qualifying commercial property owners to cover 50 per cent of rent payments from eligible small business tenants experiencing financial hardship in April, May and June.
The loans will be forgiven if the mortgaged property owner agrees to reduce the eligible small business tenants’ rent by at least 75 per cent for the three corresponding months under an agreement that includes a pledge to not evict the tenant while the agreement is in place.
The small business tenant would cover up to 25 per cent of the rent.
The federal Canada Mortgage and Housing Corp. will administer the program.
Provinces and territories will cover up to 25 per cent of costs.
It is expected the new program will be operational by mid-May, with commercial property owners lowering rents for small-business tenants retroactively for April and May, and for June.
With the first of the month just around the corner, Finance Minister Bill Morneau appealed to landlords to be flexible until the program is up and running.
Prime Minister Justin Trudeau promised Friday that Ottawa would soon “have more to say” about rent relief for larger businesses.
The Canadian Federation of Independent Business applauded many elements of the new program, but had some reservations.
The federation is concerned the program might be overly complicated and too reliant on landlords to administer, executive vice-president Laura Jones said in a statement.
Landlords might not bother with the program if it means absorbing some losses, even if their tenants badly need the help, the federation said. In addition, the threshold of 70 per cent in lost revenue might disqualify hard-hit businesses from getting help.
“This is welcome news but many business owners with dramatic revenue losses will not qualify for the program,” Jones said.
NDP MP Gord Johns, the critic for small businesses, echoed those concerns, and said the announcement falls short of the business-saving measures owners have been hoping for. “For business owners whose landlords choose to not chip in and sign on, they still face the very real threat of eviction through no fault of their own.”
Morneau said it’s in the best interests of landlords and business tenants to take part, since both are struggling.
“The landlords also have been going through challenges because in many cases, businesses have not been able to pay,” he said. “So we think this provides a very good incentive for both parties.”
Trudeau said the government is working to help as many businesses as possible, but reminded people of the unprecedented crisis Canada is experiencing.
Small businesses also have access to credit to help them through the crisis, he noted.
Financial institutions have provided interest-free credit of up to $40,000 to eligible businesses, and up to $10,000 is forgivable if the loan is repaid by the end of 2022.
Trudeau said it’s not clear yet how the country will move to reopen the economy, so the relief measures the government has put in place will be adjusted as things unfold.