Only 16,000 of Canada’s 1.2 million small businesses have applied for the Canada Emergency Commercial Rent Assistance (CECRA) in the first week. A survey by the Canadian Federation of Independent Businesses found that 40% of Canadian small businesses, or at least 400,000 businesses, are eligible for CECRA. The purpose of the program was to relieve the rents in April, May and June for small businesses suffering from the COVID-19 related shutdowns.
The program allows small businesses to only pay one-quarter of the rent for those months, with the landlord’s reducing the rent by one-quarter, and the government subsidizing 50% of the rent by providing a non-repayable loan through the Canada Mortgage and Housing Corporation. For those landlords who are looking to find a new tenant rather than absorbing the 25% of the rent cost, B.C. is one of the few provinces that has banned landlords from evicting their tenants for non-payment of rent.
It is the landlord rather than the tenant who makes the application for the subsidy. Commercial landlords say that they are not to blame for the small number of applications. Landlords have complained that the process is a bureaucratic nightmare with hundreds of pages of application documents. One complaint is that landlords can only apply once per commercial address, which is difficult for owners of buildings with numerous tenants.
Only small businesses that have lost 70% of the revenues due to the pandemic are eligible for the rent subsidy. Unfortunately, it excludes so many businesses that also experience declining revenues and cannot afford the rent.
Also landlords are concerned that the tenant lies about their finances to get the federal aid fearing that the government will go after the landlord. Both landlords and small businesses are pushing the government to lower the eligibility threshold to 30%.
