The federal government announced Tuesday that the Canada Emergency Commercial Rent Assistance (CECRA) program for small businesses will be extended by one month to help eligible small businesses pay rent for September.
But the government said this will be the final extension of this program as it explores options to support small businesses as they face the ongoing challenges of the COVID-19 pandemic — including the challenges of fixed costs at a time when health concerns and precautions prevent many businesses from operating at full capacity.
It said all provinces and territories continue to participate in this initiative and collaborate with the federal government to provide rent support to those small businesses most in need. Current CECRA application deadlines will also be extended to accommodate this extension.
“Across Canada, small businesses are working hard to grapple with this crisis so they can serve their communities and provide jobs. Our government recognizes that while small businesses’ needs are evolving, many still require support to face the challenges of the COVID-19 pandemic. That is why we are extending the rent relief provided through CECRA by an additional month, to ensure that Canadian businesses hit hardest by COVID-19 get support when they need it most,” said Chrystia Freeland, Deputy Prime Minister and Minister of Finance, in a news release.
“As we work to safely reopen our economy, our government understands that things are still tough for our small business owners and that rent remains a major expense. That’s why we are extending the Canada Emergency Commercial Rent Assistance by one month to include September. We will continue to be there for our small business owners as we rebuild,” said Mary Ng, Minister of Small Business, Export Promotion and International Trade.
CECRA HAS FACED MUCH CRITICISM THROUGHOUT THE COVID-19 PANDEMIC
The much-maligned CECRA program has faced main criticisms that it relied on landlords to opt into the program and the threshold for loss of revenue for businesses to apply was too high — impacted small business tenants were businesses paying less than $50,000 per month in rent and who had temporarily ceased operations or had experienced at least a 70 percent drop in pre-COVID-19 revenues.
“While extending CECRA for September will be welcome news for the lucky few small firms whose landlords are participating, we desperately need significant changes to delivering support for rent and fixed costs. It is good news government is considering ‘options’,” said Dan Kelly, President and CEO of the Canadian Federation of Independent Business.
Laura Jones, Executive Vice-President of the CFIB, said the organization is disappointed that no fixes to the flaws in the program have been announced.
“Rent relief is critical to the future of many Canadian small businesses. The extension will help some businesses. However, many businesses have been shut out of participating in the program due to landlord lack of participation. The deep unfairness that has existed in the program since it was launched needs to be addressed as some businesses have been operating for six months without the rent relief they need and others have already made the tough decision to close,” she said.
“We are pleased the new finance minister continues to indicate she is aware there is a problem with the existing rent relief program and is continuing to listen to small business.
“Specifically, we’d like to see changes to the eligibility criteria as well as to the application process so that rent relief can be provided directly to tenants. Some retailers have benefited from the program, but ongoing store closures remain inevitable as many landlords across the country haven’t utilized the voluntary program. Rent relief remains a priority issue for RCC as SME retailers with severely reduced revenues continue to have difficulty in paying their rent,” she said.
EXPERT SAYS EXTENSION WILL MAKE SIGNIFICANT DIFFERENCE TO FOOD AND BEVERAGE INDUSTRY
“Government is continuing to process applications as of now and will do so until the end of the month. The ministerial press release adds language to ask landlords to show goodwill and enter into deals,” he said.
“The Ministers also recognize the challenges of fixed costs at a time when health concerns and precautions prevent many businesses from operating at full capacity. We continue to advocate for a better rent support program, and hope the government considers a new and improved version of CECRA moving forward.”
“CECRA has been helpful for the minority of businesses that have qualified, but it's long past time to look for a better solution to help businesses in sectors battered by having to shut down and pay their fixed costs,” he said. “So many have yet to receive any support at all, and certainly did not receive CECRA. I applaud the new Minister of Finance for recognizing the importance of fixed cost support, and investing the time and energy into an improved approach."
“As programs like this are likely to wind down in the near future and with increasing fears of a second wave of infections, I am concerned that the small business segment of the Canadian economy could be decimated by the end of the year. Some trade groups are predicting that 60 percent of Canadian restaurants could be at risk of closing this fall and Statistics Canada data supports this dire prediction,” he said.
“Governments and commercial space landlords need to work together with small business owners in the short term to avoid long-term damage, rampant unemployment, and irreparable harm to the small business sector and the communities they serve across our country. Small business is the heart and soul of Canada and when times are challenging all levels of government must find solutions to assist business owners until things normalize and that will occur over time. Further extensions to the CECRA program beyond today’s announcement are likely and necessary.”
CFIB SUGGESTS RELIEF BE SUPPLIED INDEPENDENT OF LANDLORD PARTICIPATION
The CFIB is recommending:
Relief be independent of landlord participation;
Relief continue through the fall;
- Retroactively allowing business owners who met the 70 percent revenue loss criteria but whose landlords did not wish to participate to apply for the government portion of the assistance; and
- Provinces extend commercial eviction protection until there is a better program in place for rent relief.
As of September 7, over 106,000 small business tenants have been supported through the program, representing 994,000 employees, for a total of over $1.32 billion in rent support, according to the government.
“The government is continuing to process thousands of applications worth hundreds of millions of additional dollars of support. Property owners are encouraged to continue to make use of CECRA for eligible tenants and to work to provide flexibility where possible to their tenants as they recover from the crisis. The federal government also continues to support the provincial banning of commercial evictions during the pandemic,” it said.