Commercial rent assistance is still a complete mess: CFIB CEO
TORONTO -- Landlords need to be taken "out of the equation" of the government's small business rent relief plan as another month's rent comes due, says a lobby group.
Participation in Canada's Emergency Commercial Rent Assistance program is still too low, and provincial and federal finance ministers need to reform the program, reads an open letter from the Canadian Federation of Independent Business.
CECRA offers a forgivable loan from the government worth 50 per cent of rent, as long as the landlord agrees to reduce the tenant's rent by 75 per cent. Under the existing plan, a commercial tenant would cover the remainder -- up to 25 per cent of the rent.
The CECRA program was designed so that tenants, landlords and the government would each bear some of the monthly rent payment for struggling businesses, said Laura Jones, CFIB's executive vice president.
But in practice, landlords are not participating in the program, according to the CFIB.
"Fairly early it became apparent that there were some serious challenges with the design of this program, with the design being so reliant on landlord participation," said Jones.
She called it "an administratively difficult process," which she deemed "an obstacle."
Some landlords may not be able to afford the relief measure, she said, and others, such as government landlords, may be ineligible for the program.
About $367 million in funding has been paid out to 42,000 small business tenants, according to July 17 statistics from the Department of Finance.
The CFIB is not the first to criticize the CECRA program.
Liberal Member of Parliament Sean Casey has spoken out about lack of landlord buy-in, and New Democratic Party MP Gord Johns has also criticized the low participation rates.
KPMG LLP launched an automated tool for clients to apply to CECRA, citing the "significant administrative burden on landlords" and "slower than anticipated" uptake by landlords.
While finance ministers might be holding out, hoping to get landlords on board, Jones said it's time to "let go" of the prospect of winning over landlords and instead pivot to focus directly on tenants.
The bar to qualify for rent relief has also proven to be too high for businesses, she said, citing the rule that tenants must show a 70 per cent decline in sales during the COVID-19 pandemic.
"We have some businesses that have benefited from the existing program because their landlord has participated in the program. Then, there are other businesses who are not able to access the help they need because their landlord either can't or won't participate. That's just unfair and arbitrary," said Jones.