Only 1 in 5 Landlords in Canada are Stepping Up to Offer Small Business Rent Relief Ahead of May 1st Due Date

With May 1 rents looming, thousands of small business owners across the country are upset that landlords are still not stepping up to offer them relief and help as they struggle to stay alive during the vicious economic downturn caused by the COVID-19 (coronavirus) pandemic.

In fact, a survey by Save Small Business, a grassroots coalition of close to 40,000 small businesses across Canada, found that only one in five small businesses expect their landlord to sign on to the Canadian Emergency Commercial Rent Assistance (CERCA) program announced recently by Prime Minister Justin Trudeau.

Jon Shell, a co-founder of Save Small Business, said the advocacy group is calling on provinces to immediately ban commercial evictions until September 30 to bring landlords to the table.

He said the CERCA program is unlikely to succeed without applying more pressure on landlords to sign rent forgiveness agreements with their small business tenants.

Closed businesses for COVID-19 pandemic outbreak, closure sign on retail store window banner background. Government shutdown of restaurants, shopping stores, non essential services.

“We were worried about it so that’s why we asked the question in the survey,” said Shell of the query to small business owners about their landlords’ appetite to support the federal program. “I wouldn’t say that we’re surprised but we’re sort of heartbroken. I don’t know if that’s the right term. It’s a real problem obviously. We’re hearing it all over the place.

“People are talking to their landlords about it and they’re either getting a ‘well let’s wait and see approach’ or a ‘this seems like too much work for me, I’m just not going to do it’.”

The Save Small Business Survey, which was conducted on Monday, found that 67 percent of small businesses said the rent assistance program is the most important support rolled out by governments to date, with the Canada Emergency Business Account loan being picked by 24 percent and the Canada Emergency Wage Subsidy by nine percent. Nearly 54 percent said that without a CECRA rent reduction their business will not survive, with another 43 percent saying the program will make their survival more likely. Only three percent of small businesses said the rent abatement had no impact on their ability to survive.

“The federal and provincial governments should be applauded for designing and agreeing to a rent relief program that is urgently needed,” said Shell. “And landlords that have already initiated conversations with their tenants to come to agreements on rent relief should similarly be commended. But any province that lets May 1st pass without a commercial evictions moratorium is effectively saying that they are unwilling to protect their local community businesses.”

Because participation in the program is voluntary for landlords, and they will still be expected to accept some losses under the program, there is mounting worry many will choose to ignore it, even if badly needed by their tenants, added Shell.

“This points to a program that is overwhelmingly needed by small businesses, but that is doomed to failure without more pressure on landlords,” he said. “Provincial governments need to enact moratoriums on commercial evictions to bring landlords to the table, and consider making the CECRA program mandatory for businesses that have been closed to protect their communities. Otherwise, we will see many more community businesses closing permanently.”

Save Small Business is recommending the following actions:

  • Provincial governments institute an immediate moratorium on commercial evictions, retroactive to April 1 and extending to September 30, to match the end of the CECRA program;

  • A mechanism be created for small businesses who qualify for CECRA to notify their provincial government of landlords who decline to offer a CECRA agreement;

  • Monitoring the uptake of the CECRA program, and consider mandating the agreement for all small businesses who qualify if there isn’t significant uptake of the program;

  • Provincial governments negotiate with the federal government for a second tier for CECRA, applying to businesses whose revenues have declined between 30 percent and 70 percent. This tier should provide a 50 percent reduction in rent, compared to a 75 percent reduction for the highest tier.

“The stat is that only 25 percent of businesses have two months of cash on hand and on May 15 we’ll be two months into this. So we would expect that 75 percent of businesses won’t have made May rent and that’s what every survey says. So we know that this is going to happen,” said Shell. “Something north of 50 percent, probably closer to 70 percent, simply will not pay May rent, meaning that they will all be under threat of eviction.”

Shell speculated that perhaps for many landlords this is an opportunity to kick out tenants so they can pursue a redevelopment on their properties.

“The thing that makes me incredibly frustrated is to hear landlords complain about this deal. I mean if you think of a landlord with $10,000 a month in rent, their total revenue for this year under this deal is $112,500 instead of $120,000. It’s a tiny cut in their income and it won’t affect any of them at all,” said Shell.

“The average landlord in this country will see a $7,500 drop in revenue on $120,000 which is something like less than seven percent. And they’re complaining. That’s why it should be forced. Any province that doesn’t mandate this is in the pocket of landlords.”

Basically, CECRA will provide forgivable loans to qualifying commercial property owners to cover 50 percent of three monthly rent payments that are payable by eligible small business tenants who are experiencing financial hardship during April, May, and June; the loans will be forgiven if the mortgaged property owner agrees to reduce the eligible small business tenants’ rent by at least 75 percent for the three corresponding months under a rent forgiveness agreement, which will include a term not to evict the tenant while the agreement is in place and the small business tenant would cover the remainder, up to 25 percent of the rent.

Impacted small business tenants are businesses paying less than $50,000 per month in rent and who have temporarily ceased operations or have experienced at least a 70 percent drop in pre-COVID-19 revenues.

Several issues have emerged. Many are saying the program is complicated and confusing. It also does not include those businesses who have seen revenue reductions of less than 70 percent. Also it doesn’t apply to bigger companies and retailers who are paying $50,000 a month in rent.

Landlords are also wondering about specifics of the program. How is rent defined? Base rent or does it also apply to common area maintenance and property taxes?

Also, it appears as if the government is only providing assistance to landlords who have a mortgage on their property.

Article Author

Mario Toneguzzi
Mario Toneguzzi
Mario Toneguzzi, based in Calgary, has more than 40 years experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, faith, city and breaking news, and business. He now works on his own as a freelance writer and consultant in communications and media relations/training.

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13 COMMENTS

  1. My mother is the landlord of a very small commercial property in Vancouver for many decades. We are supportive of our tenants because we are also "little guys" and a small business. We would like to participate in CECRA, but why is it only for landlords that have a mortgage? This requirement is the last line in the retailer-insider.com article from 28/4/20. After decades, we finally paid off the commercial mortgage. If having a mortgage is a requirement for CECRA, then we cannot afford to participate. Without rent from tenants, how are we going to pay the exorbitant property tax coming up?? Many landlords are also small businesses. Please make it fair for everyone

  2. Own a store and just received annual rent increase from my landlord in Oshawa…….have not seen him in a year, no replies to rent relief message. And now this…

  3. My commercial landlords have already served us and changed the locks while we waited on this deal. The landlords have put us in complete distress during a pandemic. They have refused this deal even though their loss would be minimal. So i have to watch my families 75 year old small business crumble

  4. To echo the previous post, please make it fair for everyone! The federal government should stop protecting big banks and mandate them to offer some real relief to landlords and home owners. There should be no rent or mortgage payments during this crisis, or reduced payments for all. Presently if you defer mortgage payments, the big banks continue to charge you interest, extending your mortgage and in effect making more money off of you when you are suffering. Profiteering off of COVID 19 should not be permitted. The current supports devised by this government are inadaquate and ignore too many people’s plight. Wether you are a tenant or a building owner, we all need relief right now.

  5. This article is completely biased and unfair to the countless landlords that don’t qualify for the CECRA in their province. The article makes the erroneous assumption that every landlord can access the program and that many just dont want to.

    How about Save Small Business send a survey to the landlords to determine how many of them can’t help their tenants under the CECRA because they can’t get it.

  6. This program benefits the landlors – not the tenants.
    It protects a landlord who would have gotten zero rent, but does not offer any support to small businesses who pay and ope to be reimbursed or credited later. The landlord just won’t apply. Why apply to get 75% of the rent when you already have 100% in your pocket.
    This will not help the majority of small businesses who desperately need this help.
    My small business qualifies for this program and my landlord has no intention of participating.
    The idea was great, and the rent relief is very much needed but the program will not be successful without forcing landlords to do their part.

    • Maybe allowing the 25% that the landlord puts in to be deferred? That would make all landlords jump on board. Tenant pays 25% now and 25% over next year or 2. Doesn’t any other small business owner have money put aside for a rainy day fund?

  7. There are so many small mom and pop businesses in my community who rent but unfortunately they cannot get the rent assistant program because their landlord does not have a mortgage. I have had calls from some of them who will be closing their door very soon permanently. I don’t understand why the government does not send the rent directly to the renter. Renter would have to send a copy of their business license with address. They could get the municipality to officially stamp it. The renter could submit receipts, etc for proof. Some of the businesses told me even half would be better than nothing. The businesses even tried for the 40T dollar loan but when you pay yourself it is called a dividend not wage. You might have a part-time or full-time employee but that still does not meet the criteria. No traffic, no cash flow, no money to pay your debts. There is another problem there has been a few people who just bought businesses this year, borrowing the money to purchase them. What happens corvin and they have to close. Now they have rent, bank debts and other bills the go with any business. There is nothing there and the story goes on and on. They need help for some they have spent their life savings now what and for some they will call bankruptcy or pay for the rest of their life. I sure hope the government looks at the bigger picture when they roll this program out. The smaller mom and pop businesses pay taxes too.

  8. There was supposed to be an update on May 15. Today was supposed to be the day landlords would be provided with information on how to apply. Tenants were supposed to be informed of changes that could allow them to apply directly if landlords were refusing. Nothing has been mentioned again since April 30 and we are left in limbo. What is happening with the 75% commercial rent subsidy?

  9. If the government didn’t force the landlord to forego 25% and allowed them to defer the 25% so the rent was 50% forgiven by government and 25% deferred by landlord, every landlord would agree.
    I wonder how small business owners would appreciate the government forcing them to keep all of their employees on staff because they “only” have to cover 25% while wage subsidy is in effect. People who couldn’t pay April rent – 2 weeks after covid hit – shouldn’t be in business. May and June is a different story.

  10. All small business in suffer big lost , they asking Landlord mercy , or forgiveness. Landlords should understand this hard times out of control small business owners. As a part multure benefits in long term relationship Tenants also a part to pay Lanlords mortgage too. Commercial lease contract treat like a joke , most Landlords define their owned terms and their owned greed. Commercial Laws should change since this cristic to save small business at front line.

  11. My landlord basically told me he’d comp 1 month and told me to figure it out. I refused and would rather go into debt as I know this act of "charity"on their part will be lorded over me until my lease is up. I’d rather go into debt with the bank then to have my landlord use this as a way to manipulate and coerce me.

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