On Friday, Prime Minister Justin Trudeau announced the Government of Canada is implementing a program to help lower rent for small and medium-sized businesses affected by COVID-19.
The program offers forgivable loans to commercial landlords for 75 percent of rent in exchange for a reduction and moratorium on evictions.
Trudeau, who promised rent support was in the works last week, said the federal government has reached agreements with all provinces and territories to lower rent by 75 percent for small and medium-sized businesses (SMBs) that have been “heavily affected” by the economic downturn surrounding the current pandemic.
The Canada Emergency Commercial Rent Assistance program will allow SMBs to pay just 25 percent of their monthly rent, with governments and property owners absorbing the other 75 percent. Businesses that pay $50,000 or less per month in rent and have temporarily ceased operations or experienced at least a 70 percent drop in pre-COVID-19 revenues will be eligible for the program.
Trudeau noted that the decision to implement the program comes as small businesses across Canada have expressed concern about losing their office space or retail shops.
The federal and provincial governments will collectively pay for 50 percent of the monthly rent through the Canada Mortgage and Housing Corporation, with property owners absorbing the remaining 25 percent. When asked about the agreements reached with provinces and territories and the breakdown of government support Trudeau said more details will be provided later on Friday as part of a technical briefing.
Minister of Finance Bill Morneau and Minister of Small Business Mary Ng have clarified that the program is offering forgivable loans to commercial landlords/property owners that would cover 75 percent of monthly rent in exchange for a rent reduction from landlords of 75 percent and an agreement to put a moratorium on evictions. Commercial landlords will be able to have the loans forgiven as long as they can show they provided the reduction in rent to the tenant. Forgivable loans would be disbursed directly to the mortgage lender.
Morneau noted that the federal government has “agreements in principle” with every province and territory for the commercial rent assistance program. He said the loans will become available in mid-May and encouraged landlords to be flexible in the coming days. The rent assistance will be retroactive and available for the months of April, May, and June. The Canada Emergency Commercial Rent Assistance program is being administered through the Canada Mortgage and Housing Corporation’s mortgage system, said Morneau.
Provinces and territories have agreed to “cost-share” the total costs of the program and facilitate implementation; they will be responsible for up to 25 percent of costs, subject to terms of agreements with the federal government.
The rent program is currently open to SMBs and non-profits, with the prime minister noting that more details on rent support for larger businesses coming within the next few days. The government has yet to provide details on what this rent relief program will cost. Further details are set to be shared once final terms and conditions are available.
The Canadian Federation of Independent Businesses (CFIB) released a statement noting it is pleased to see the federal government move forward with the rent assistance program but expressed concern that the program may be too compacted and reliant on landlords administering.
In response to a similar question, Morneau explained the government sees this program as a way to provide “good incentives” to both SMBs and landlords, which have also been facing challenges with some tenants unable to pay rent in the past few months. The finance minister noted the program guarantees that landlords are able to recoup at least 75 percent of monthly rent payments.