Business owners anxious as federal rent relief program ends with no replacement

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The federal government allowed its small-business pandemic rent-relief program to expire at the end of September without providing details for its long-promised replacement, leaving thousands of entrepreneurs facing full rent payments as October begins.

The end of the Canada Emergency Commercial Rent Assistance (CECRA) program comes as a second wave of COVID-19 infections strikes Canada, prompting jurisdictions such as Ontario and Quebec to restrict public gatherings – driving down already diminished revenues for many small businesses.

Entrepreneurs have warned Ottawa for nearly seven months that they need help with their fixed costs in order to survive the pandemic. The federal government’s response, CECRA, was widely criticized because it required landlords to apply to the Canada Mortgage and Housing Corp. for forgivable loans worth half their tenants' rent and expected those landlords to absorb another quarter of rent costs. This left many tenants powerless if their landlord wanted to charge full rent, or opted not to apply for other reasons.

Finance Minister Chrystia Freeland said in early September that the federal government would end CECRA as it explored other options to help small-business owners with rent. Last week’s Throne Speech signalled that Ottawa would expand the Canada Emergency Business Account (CEBA) partially forgivable loan program to help with business owners' fixed costs – of which rent is often the largest. But the government did not indicate what the revisions would look like by Wednesday, the final day of CECRA, leaving many entrepreneurs wondering how they would pay rent on Thursday.

They include Jo-Anne Cross, owner of the Wig Boutique in Sudbury, who says she simply can’t afford to pay October rent without support. After three months closed and another three-and-a-half with limited appointment-only customers, her fiscal year ended on Wednesday with $90,000 less revenue than the year before – and she wonders why Ottawa is dragging its feet on new relief.

“I’m very upset and frustrated that they can’t get their darn act together and realize what’s happening to all of these people who have small businesses,” said Ms. Cross, who spent several months convincing her landlord to apply for CECRA, only to see the program disappear.

The 66-year-old entrepreneur hopes applications for the new program are much simpler and more straightforward. And if it takes the form of an expansion of the CEBA loan program, she’d like as big a portion of the loans as possible to be forgivable.

“At this stage in my life, I do not want to incur debt to keep my business afloat. I struggled hard enough to get it going,” said Ms. Cross.

Restaurants and bars have faced particular hardships throughout the pandemic – months of little or no revenue during economic shutdowns were followed by moderate increases during patio season. Now that summer is over, owners fear the combined threat of new shutdowns and ambiguity around subsidies for rent and wages going into October.

With cases rising, Quebec is already facing four weeks of restaurant and bar shutdowns to try to quell the spread of COVID-19, while the Ontario industry faces reduced hours and limits on the size of gatherings as the province’s infection rate could soar to 1,000 new cases a day by mid-October.

“I think it’s pretty clear that most independent restaurants aren’t going to survive this without rent subsidies, and hopefully wage subsidies as well,” said Awai Hospitality founder Roger Yang, who owns Toronto restaurants Avelo and Pizzeria Du.

His team has invested thousands of dollars in precautions – Avelo now has acrylic-glass barriers and high-efficiency air filters protecting its limited seating – and one of his locations has benefited from CECRA. But Mr. Yang worries business owners have no clear road map as they spend increasingly scarce money to stay afloat: “There’s so little guidance from government – very few people seem to know what to do.”

In an e-mail, Ms. Freeland’s spokesperson Katherine Cuplinskas said the government is working on a program to address small businesses' fixed costs. “We are working with provinces, territories, municipalities, and business to do that in the best way possible,” she said. “We will have more to announce soon.”

As of Sept. 28, CECRA had helped more than 120,000 small businesses at a cost of $1.68-billion. Research from the Canadian Federation of Independent Business found that 400,000 businesses should have qualified.

“We recognize there is more work to do," Ms. Cuplinskas said.

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