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The program requires tenants to pay for a quarter of their gross rent for April, May and June and will give landlords a forgivable loan from the CMHC worth half the rent if they agree to absorb the remaining quarter themselves.

Nathan Denette/The Canadian Press

Commercial landlords say the application process for small-business rent-relief funding is so confusing and onerous that many wouldn’t apply for the pandemic program, which has already faced criticism for leaving tenants powerless to apply themselves.

When Ottawa unveiled the Canada Emergency Commercial Rent Assistance (CECRA) program in late April, it required landlords to apply on behalf of small-business tenants. Many entrepreneurs found out their landlords did not want to apply. Some have already been evicted. But even those landlords who are trying to apply say the massive amount of paperwork and time required, and confusing language in the application process, present significant roadblocks to accessing CECRA.

“Every confusion creates a risk that deters people from applying,” said D. Bruce Weary, an Alberta lawyer who has tried to apply for CECRA on behalf of four tenants in a building owned by his wife’s company on the northwestern edge of Edmonton.

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CECRA has come under fire over its launch and application delays, as well as for jurisdictional confusion. It’s run jointly with Canada’s provinces and territories, which in some cases had contradictory and incorrect details on government websites, which has confused landlords. Some provinces have enacted bans on evicting small businesses that are eligible for CECRA. And with July 1 just days away, the federal government has yet to extend the program beyond its original April-through-June eligibility period.

The program requires tenants to pay for a quarter of their gross rent for April, May and June and will give landlords a forgivable loan from the Canada Mortgage and Housing Corp. worth half of the rent if they agree to absorb the remaining quarter of it themselves. Tenants are eligible if they pay less than $50,000 in rent, have less than $20-million in gross annual revenue and have seen at least a 70-per-cent drop in revenue from the pandemic. Some entrepreneurs have expressed worry that provinces reopening in June may hurt their chances at getting full relief funding.

The Canadian Federation of Independent Business says it has heard from both landlords and tenants that the CECRA program is so cumbersome that the landlords are choosing not to apply. Even some landlords wonder why the money doesn’t flow directly to tenants.

“You’re adding a complicated program on top of the fact that they themselves are being asked to take a 25-per-cent hit,” says Laura Jones, the federation’s executive vice-president.

“Any time there are questions, it leaves a wake of confusion.”

As of June 15, more than 13,300 small business tenants had been approved or funded via their landlords, the Department of Finance said. Applications opened May 25. Canada has more than one million small businesses.

“As the economy safely reopens, we continue to review our suite of programs to best support businesses through these uncertain times,” Finance Department spokeswoman Maéva Proteau said when asked about landlords’ frustrations. “... Support is provided to applicants to ensure they are able to apply and access this funding.”

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Mr. Weary immediately ran into problems when he tried to apply for CECRA, noticing a line on the CMHC application process’s loan agreement that struck him as odd.

It said that the agency would provide the loan equal to half of rent minus “a pro rata portion of any insurance proceeds available to it … or any non-repayable proceeds of any federal or provincial government programs (other than the CECRA Program) targeted at commercial rent assistance instituted in response to the COVID-19 emergency” that the tenant or landlord could receive.

Mr. Weary began to wonder whether this meant his tenants couldn’t qualify if they applied for other relief funding, such as the $40,000 Canada Emergency Business Account loan program or similar offerings through the Regional Relief and Recovery Fund. If so, many tenants would find themselves ineligible for CECRA. He said he spent hours on the phone with CMHC agents and never got a clear answer.

It was only after The Globe and Mail sought to clarify this through CMHC’s media representatives that the agency explained its position. “The CECRA loan is by no way impacted by the other programs under the government’s COVID-19 Economic Response Plan, for tenants or property owners,” CMHC spokesperson Leonard Catling said. “This clause is to prevent CECRA from providing support where other support already exists, either through insurance proceeds or other government rental support programs.”

Asked what other government rental support programs he meant, Mr. Catling responded: “I do not know of any that exist – if they did it would be at the provincial level.”

Mr. Weary says this lack of clarity and level of complexity leaves him worried that others simply may not apply. “You’ve got to take on a lot of work, some expense, a bit of risk and some potential liability,” he said. “All of this is to basically give away 25 per cent of your revenue.”

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Oxford Properties, a major commercial real estate owner, plans to make more than 1,000 CECRA applications for its hardest-hit tenants across Canada. The applications are for tenants in malls, offices and industrial properties.

Major commercial landlords have struggled not just with CECRA paperwork, but with co-ordination. All applications for tenants in a given property must be filed in the same batch. “One of our members counted that it was going to be required to negotiate over 5,000 agreements – with existing staff only, who already have a ‘day job,’” said Michael Brooks, chief executive of REALPAC, an industry group that represents the largest property owners in Canada.

“It has been a long road to convince CMHC to make their terms and conditions and legal agreements commercially reasonable,” Mr. Brooks added.

Individual property owners such as Carol Mair, who owns a building on Toronto’s Queen Street West, don’t have staff to help with applications at all. She struggled to make it through the registration process before even beginning the application for her tenant, a barbershop.

Ms. Mair has already had to send documents back and forth for her tenant to sign, including an attestation confirming his lease details and revenue drop. She spent hours gathering details and documents, and expects to spend another full day to make sure the application gets done.

“I don’t know how successful it’s going to be to keep people in business when the process is so onerous,” Ms. Mair said. But she also struggles to understand how some landlords would rather evict their tenants and find new ones than apply for CECRA: “Who in the heck is starting a business and can rent now?”

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With a report from Rachelle Younglai

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