Ottawa is proposing to offer commercial rent relief in the form of loans for landlords of small and medium-sized businesses that would cover up to three-quarters of tenants’ payments for three months, according to sources familiar with the negotiations.
A portion of the loans – as much as two-thirds, according to three sources – is expected to be forgivable. Discussions with provinces and territories were continuing as next month’s rent payments loom, said the sources. The Globe and Mail granted the sources confidentiality because they weren’t authorized to discuss the negotiations.
Small and medium-sized businesses, or SMBs, especially those with slim margins and less access to credit, have been among the hardest hit by the novel coronavirus crisis since being forced to shut their doors nearly six weeks ago to quell the virus’s spread. As their revenues have plummeted, many of their fixed costs have continued to pile up, with rent as their biggest burden.
Thousands of these small companies, and lobby groups including Save Small Business and the Canadian Federation of Independent Business, have been calling on Ottawa for rent relief as a first wave of entrepreneurs shut their doors for good because of dire finances.
While Prime Minister Justin Trudeau promised an emergency commercial rent assistance loan program last week, Ottawa has yet to provide any details.
Tenants would need to demonstrate their revenue collapsed because of the pandemic, the sources said.
Three of the sources said the current proposal would require tenants to cover the remaining 25 per cent of their rent, and that the program would initially cover April, May and June rent, with further months subject to a later decision.
Significant questions remained over measures that would guarantee landlords use the money to relieve their tenants, two sources said.
Commercial tenancy is a provincial jurisdiction. One source said the provinces and territories would be expected to contribute some of the backing for the loans, but that not all had signed on as of late Thursday evening, and that details had changed over the course of the week.
They expected the program to be run through Canada Mortgage and Housing Corp., as opposed to commercial banks or business banking agencies such as Business Development Bank of Canada, which have administered other pandemic relief programs.
CMHC declined to comment Thursday, as did spokespersons for Small Business Minister Mary Ng and Finance Minister Bill Morneau.
Some businesses are now permanently shutting down across the country after weeks of calling for rent relief to reduce their financial burdens. A survey released Thursday by Restaurants Canada found that one in two independent restaurants expects to close. And this week, more than 5,300 entrepreneurs sent form letters created by Save Small Business to provincial leaders highlighting just how dire their needs were.
The entrepreneurs asked for a mandatory rent reduction as well as a suspension of commercial evictions in order to guarantee they would survive long enough for such a program to be enacted. They also asked for provinces and municipalities to work together to guarantee three months of property-tax abatement for landlords, and for that savings to be passed to tenants.
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