Commercial rent subsidy program uptake remains low

The federal government has extended the rent subsidy program CECRA another month, but only some 21,000 small businesses across the country are getting relief


This week, Finance Minister Bill Morneau announced the Canada Emergency Commercial Rent Assistance (CERCA) program is being extended by one month to cover July rents.

But ever since the rent relief program was introduced in April, small business owners have voiced concerns over restrictions in accessing the program.

As of June 23, only around 21,000 of Canada’s nearly 1.2 million small businesses have been approved or funded through the CECRA program, according to a spokesperson for the federal government’s department of finance. That equals to around $163 million in funding.

When CERCA was announced, the federal and provincial governments said it would provide more than $900 million in support.

With CECRA, which is administered through the Canadian Mortgage and Housing Corporation (CMHC), the commercial tenant only needs to pay up to 25 per cent of their regular rent. The federal and provincial governments cover 50 per cent and the landlord covers the remaining 25 per cent. The landlord must agree not to evict the tenant while the program is in place.

Only the landlord can apply to the program, which has left some tenants who do qualify for the program without rent relief.

In a recent survey by the Canadian Federation of Independent Businesses, 39 per cent of tenants said they need the CECRA program, but cannot access the program. Meanwhile another 32 per cent say they do not need rent relief.

Despite the overall low uptake numbers, the National Coalition of Commercial Property Owners (NCCPO), a coalition comprised of landlords across the country, says in a statement to NOW that “counter to the narrative that has been perpetuated in some media articles and by politicians, [landlords] have applied to participate in the program.”

The NCCPO also noted that the CECRA program would be more successful if the funding was allocated directly to tenants, rather than landlords.

“Direct payments to small businesses are better. Under the CECRA program, tenants who qualify are still required to pay 25 per cent of their normal rent, but many can’t even afford that when they have had no revenue for the past two months,” says a spokesperson for the NCCPO.

As part of the CECRA extension, the federal government is also simplifying the application process by removing the requirement to claw-back insurance proceeds and provincial supports from the forgivable loan amount, a stipulation that the NCCPO have said is counterproductive.

Landlords who are already using the CECRA program have until August 31, 2020, have to reapply through the CMHC for the July extension.

With Ontario in stage two of the reopening process, retail businesses and personal services like barber shops and hair salons are allowed to reopen with physical distancing measures in place, while bars and restaurants are allowed to open patios.

@SamEdwardsTO

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