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The Dakota Tavern in Toronto is seen on Sept. 30, 2020.Fred Lum/The Globe and Mail

Canada’s new rent-relief program for small businesses is expected to allow entrepreneurs to apply for aid, rather than their landlords, sources familiar with those discussions said, while Toronto Mayor John Tory said that governments intend to make the program retroactive to Oct. 1.

The Globe and Mail is not identifying the sources because they were not authorized to describe the discussions. The Canada Emergency Commercial Rent Assistance (CECRA) program came to a close at the end of September after months of criticism because its structure required landlords to apply, which prompted low uptake.

As of Sunday, the federal government said, CECRA had helped more than 128,000 small businesses at a cost of $1.8-billion to Ottawa and the provinces, despite being budgeted for $2.97-billion. Research from the Canadian Federation of Independent Business also found that about 400,000 businesses should have qualified.

CECRA’s structure required landlords to apply to Canada Mortgage and Housing Corp. for forgivable loans that would cover half of an entrepreneur tenant’s rent, as long as the tenant covered one-quarter and the landlord absorbed the remaining quarter. Tenants were eligible if they paid less than $50,000 a month in rent, brought in less than $20-million in gross annual revenue, and had seen revenue drop by at least 70 per cent because of the pandemic.

Finance Minister Chrystia Freeland’s office declined to confirm details of the new program.

“In the Speech from the Throne, our government committed to providing further support for small business with their fixed costs, very much including rent,” said Katherine Cuplinskas, a spokesperson for Ms. Freeland, in an e-mail. “We are working with provinces, territories, municipalities, and business to do that in the best way possible. We will have more to announce very soon.”

Ms. Freeland said in early September that CECRA would wind down that month as the government considered options for a new program design. There was no mention of a new program during the Throne Speech later that month, save for a reference to the Canada Emergency Business Account partially forgivable loan program being expanded to help entrepreneurs with fixed costs.

CECRA lapsed last week without a replacement, frustrating business owners as many were forced to write cheques for full rent just as COVID-19 infection rates began prompting sector-specific shutdowns in jurisdictions such as Montreal and Quebec City.

But on the weekend, Mr. Tory wrote in a tweet that he had been told by Ms. Freeland that her office was working to make the replacement program retroactive to Oct. 1.

One government official, who was not authorized to describe the discussions, cautioned that those discussions are still continuing and that no details are yet set in stone.

Bloomberg first reported Monday that the replacement rent-relief program would let entrepreneurs apply instead of their landlords.

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