May 1st, 2020
Letter to Minister Ng Calling for Adjustments to Canada Emergency Commercial Rent Assistance (CECRA)
Our letter today is in response to the announcements made last week about the Canada Emergency Commercial Rent Assistance (CECRA) for small businesses. While we welcome the initiative, as we called for in our April 9 letter, the program as announced does not do enough to support small businesses.
Because the government continues to roll-out new initiatives for small businesses and individuals daily, the need for a National Commercial Rent moratorium has never been clearer.
Small businesses write to us everyday concerned about whether they’ll be able to open their doors in the coming months. Many are making those decisions now, as businesses are closed or sales are severely reduced, and rent is coming due in the next few days. Because of the uncertainty in what support they’ll be able to get, businesses should be assured that they won’t be evicted.CECRA needs to be open to all commercial tenants and not just in the hands of landlords.
The program as it’s designed relies on the goodwill of landlords and, according to the CFIB, nearly 31% of businesses don’t believe their landlord will support them even if they do qualify. There must be a strict moratorium on evictions now and greater accessibility for this reason. Further, there is an existing requirement that landlords must have a secured mortgage which disqualifies many from receiving support. Where CMHC says an alternative mechanism will be used in these cases, without more clarity businesses and landlords are not able to make informed decisions or plan for their futures.
Rent is due today and time is of the essence or we could witness the biggest collapse of small business in Canadian history.The qualifications also limit those businesses who are losing significant revenue from receiving help. In order to qualify, businesses must be losing at least 70% of their revenue. But small business operators know that even a small loss of income can lead to a permanent closure. Operating at 50% of revenues is not a long-term strategy and many businesses could be expected to operate at significantly reduced revenues for at least 4 months. Many have shifted their operations to involve curb-side pickups, door-to-door delivery, or online shopping to ensure they can keep paying their staff and their bills including rent. But while they’re able to pay some of their bills, they can’t pay all of them and still don’t qualify for critical support.
This can be addressed by creating a tiered-system of commercial rent support. Where businesses with 70% drops in revenue can receive up to 50% rental support, businesses earning between 30%-70% of their pre-COVID revenue can receive a lower amount. We implore you to work with the provinces and territories to build this into the CECRA and ensure that all businesses that need help can get it. The Canada Emergency Wage Subsidy (CEWS) uses a 30% drop in gross revenue as its qualifying condition and any business facing that level of revenue loss will have a difficult time surviving once restrictions are lifted. The CECRA must be reflect the reality businesses are experiencing and be consistent with other government programs.Combined with the inaccessibility of the Canada Emergency Business Account (CEBA), too many small businesses are falling through the cracks when government programs are designed and implemented with so many excluded.
As the Minister for Small Business, I know that you understand the importance of small business contributions to local economies, the culture and spirit they bring to communities, and their role in neighbourhoods and support systems. It is crucial to make these changes to the CECRA in order to ensure businesses will open their doors and remain open for years to come.
Please don’t hesitate to reach out should you have any questions and thank you for your prompt attention in helping small businesses across Canada.
Gord Johns, MP for Courtenay-Alberni
Peter Julian, MP for New Westminster-Burnaby