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Small businesses operating in government-owned buildings say they’re struggling to stay afloat because their landlords are ineligible for the federal-provincial rent relief program.

Ottawa, the provinces and territories announced the Canada Emergency Commercial Rent Assistance (CECRA) program in late April. The program offered to cover half of many small businesses’ rent for three months if they paid a quarter and the landlord didn’t charge for the final quarter. The program has drawn heavy criticism, particularly because the landlord must apply – leaving tenants powerless while giving some landlords huge amounts of paperwork for numerous tenants.

But Canada Mortgage and Housing Corp., which runs the program, says governments themselves are ineligible as landlords, leaving small-business owners who rent from government agencies frustrated that they’re being left behind by a government-designed program.

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“I’m trying to figure out what help the program is actually supposed to supply, if it’s not helping small businesses,” said Jordan Craig, president of the Performance Solutions special-effects and design company, which operates in a City of Toronto-owned building in the city’s Port Lands.

His neighbour Shakir Omar, who runs the Keating Channel Pub & Grill, wonders why governments aren’t talking to each other to solve their problem: “We’re the small businesses that all this was intended for, and you guys are the landlord – why can’t you make it happen?”

The restriction around government landlords is yet another constraint to the widely criticized CECRA program, affecting hundreds, if not thousands, of businesses countrywide. Entrepreneurs want governments to revamp the program to better address their mounting rent burdens.

“This is another example of how the design of the program is working against helping business owners who need help in a way that is completely arbitrary and unfair,” said Laura Jones, executive vice-president of the Canadian Federation of Independent Business.

Canada Mortgage and Housing Corp. says that although some government-funded institutions such as hospitals and universities can be CECRA-eligible landlords, the program was “designed to support property owners who are non-governmental entities.”

“Where government is the property owner and has a direct lease with a tenant, then the government entity is best placed to work directly with its own tenants to provide rent relief under their leases without accessing CECRA,” said CMHC spokesman Leonard Catling in an e-mail. “This avoids transfers of CECRA funding to other levels of government.”

Despite this, federal Finance Ministry spokeswoman Maéva Proteau said late Thursday that small-business tenants in federally owned and Crown corporation-owned buildings should be offered the same 75-per-cent rent reduction for April, May, June and July rents as CECRA.

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“The government has decided that they, as well as Crown corporations, should provide rent reduction to their commercial tenants, in alignment with CECRA intent and core criteria,” Ms. Proteau said in an e-mail.

It was not clear late Thursday whether or how this decision would be extended to provincially or municipally owned buildings.

Landlords can apply for CECRA on behalf of tenants who pay less than $50,000 in rent monthly, earn less than $20-million in gross annual revenue and have seen at least a 70-per-cent drop in revenue from the pandemic.

Mr. Craig and Mr. Omar’s buildings are managed by CreateTO, a city agency overseeing Toronto’s real estate assets. They were offered rent deferrals, but, like many entrepreneurs across the country, would prefer to have their rent covered for the period that government-ordered shutdowns diminished their revenues – rather than simply owe more money later.

CreateTO spokeswoman Susan O’Neill said in an e-mail that despite the limitations that CECRA imposes, the agency is supporting its tenants in other ways, including by deferrals. “We continue to work with our tenants and in some cases, rent relief has been extended beyond three months for those who need it,” Ms. O’Neill said.

Very few small businesses or landlords have been satisfied with CECRA. Beyond neither group wanting the onus to be on landlords, CECRA was also announced and rolled out later in the pandemic than other programs. And governments have had to both clarify and change eligibility requirements since CECRA’s announcement after media outlets pointed out inconsistencies and roadblocks for entrepreneurs.

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Mom-and-pop shops often have thin margins and high overhead costs, the biggest of which is usually rent. Many struggled to stay afloat during widespread economic shutdowns this winter and spring. Even as revenues began inching upward as provinces gradually reopened, physical distancing and other safety measures have prevented income from reaching normal levels.

The Sushi Eben-Ezer restaurant in Maple Ridge, B.C., was only able to reopen in late June, and was offered a rent repayment plan by its landlord – the City of Maple Ridge. But owner Sally Kang says she’s struggling to figure out how to repay several months’ rent when business is slow. “It’s worse than before,” she said.

Her husband, James McDevitt, said that when CECRA was announced, it felt like “we won the lottery. And when we found out we’re not qualified, it felt like it was taken away from us.” He and Ms. Kang have since launched a petition asking the federal government for more flexibility with the program.

The mayor of the Lower Mainland city, Mike Morden, said he was among Ms. Kang’s supporters hoping the federal government would modify the program.

“Our hope was that the spotlight on this topic here in our community, and in communities across the country, would have resulted in a modification of the program for, minimally, local governments who would have to fund any support programs with local tax dollars,” Mr. Morden said in an e-mail.

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