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May 1 has come and passed. In the time before COVID-19 life would have continued at its normal pace. We would have gone to work and school, and business would have continued as normal. However, these are abnormal times. The start of the month is when rent is due for tenants across the province. For small businesses, what would have been a regular expense is now turning into a matter of survival.
By now, we have all heard of the dilemma of small business and restaurant owners across the country faced with a sudden drop in revenues and the continued buildup of expenses due to this pandemic. Despite their best efforts, many small businesses are being forced to close due to no fault of their own.
To help stem the tide of closures and vacancies that is on the horizon, the Prime Minister announced the Canadian Emergency Commercial Rent Assistance. Under the program, landlords can apply through the Canada Mortgage and Housing Corporation for a forgivable loan to cover 50 per cent of rent due from their small business tenants for the months of April, May and June. The tenant will be responsible for not more than 25 per cent of the rent due for those months and the property owner will be responsible for the remainder. Although this is a financial sacrifice for the landlord, it is clearly better than losing a good tenant to bankruptcy.
Landlords are reluctant to sign up for the program, leaving many small businesses frustrated and unable to meet their obligations. The urgency for landlords and small businesses to come together and find a way forward is paramount. Allowing vacancies to build up due to this pandemic is not a smart plan for business. In a normal business environment these storefronts would be easily filled with entrepreneurs eager to move into prime real estate.
This pandemic has created too much uncertainty in the marketplace. Without a vaccine on the horizon, most public health experts are predicting future calls for social distancing. It may be some time before surviving restaurants and retail stores are able to re-open to a fully functional capacity. As for replacing those small businesses that don’t survive the pandemic, it is unrealistic to expect investors to take on the risk of starting up a new restaurant or retail business right now. Landlords expecting a quick return to business as usual might be disappointed. As this pandemic continues, we risk our public spaces becoming boarded up shells of their former selves and property values and taxes would no doubt plummet, compounding the economic recovery.
Fortunately, the federal and provincial governments are providing lifelines to landlords and tenants. Landlords and small business owners need to come together and find a way to implement the CECRA to see our way through this crisis. It is unlikely that more money is going to be coming from the federal government any time soon. Public goodwill is generous right now, but it isn’t endless. Now is not the time to try negotiating for more money. The current offer on the table is a good one and I doubt the public is going to accept negotiating for more money on the part of landlords across the country.
If the federal government has provided the proverbial carrot in the form of financial assistance, then, the provincial government may need to use tenant protection legislation as the stick. Provincial governments have all passed protection for residential tenants, but only New Brunswick has extended that protection to commercial tenants. It may be time for the other provinces to join in. If evictions are prohibited, then the incentive to participate in the CECRA will increase.
These are not perfect solutions, but as we’re all discovering, there does not seem to be any such thing in this pandemic.
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