The federal government is expanding a loan program for small- and medium-sized businesses suffering from the COVID-19 pandemic and working on a new support for companies having trouble paying rent.

Prime Minister Justin Trudeau announced the expanded loan program during his daily news conference on Thursday, saying the government had heard concerns from some businesses and entrepreneurs in need that the previous criteria excluded them.

The Canadian Emergency Business Account will now provide up to $40,000 in government-guaranteed loans to businesses that had payrolls last year between $20,000 and $1.5 million. It previously offered loans to business with a narrower range of payrolls, between $50,000 and $1 million.

"No one should feel as if they're alone in this fight," Trudeau said. "Our government is here to help you through these challenging times. So when we hear the program is not reaching as many people as it should, we make changes."

Without rent assistance, wage subsidy 'won't stop doors from shutting' on employees: CIBC's Tal

CIBC's deputy chief economist Benjamin Tal says a rent solution focused on forgiveness will keep economy moving and prevent companies from having to fire employees and hire all over again at the pandemic's end.

Since the loan program was launched last month, Trudeau added, businesses have taken out 195,000 loans worth a total of $7.5 billion. The loans are interest-free until Dec. 31, 2022 and if they're paid off by then, up to 25 per cent of the total will be forgiven.

"This is money entrepreneurs and employers can use to cover operational costs and help with other immediate needs," Trudeau said.

In a release, the Prime Minister’s Office indicated the rent relief program would provide loans to commercial landlords who reduce or forgo rent obligations for small businesses in April, May and June. Details still need to be worked out with the provinces and territories, however, since they hold responsibility for owner-tenant relations.

CIBC Deputy Chief Economist Benjamin Tal said he’s encouraged by the announcement, however he implored the government to move quickly.

“If you don’t deal with the rent issue you are reducing the effectiveness of the wage subsidy because some businesses cannot pay rent,” he told BNN Bloomberg, referencing the Canada Emergency Wage Subsidy.

“They will simply close shop, fire people and not even bother applying for the 75 per cent wage subsidy. If you actually deal with the rent issue, you’re enhancing the effectiveness of the wage subsidy program which is actually the most significant program helping small businesses,” Tal said.

– with files from BNN Bloomberg