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By Kamloops-South Thompson MLA Todd Stone

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SOUND OFF: Commercial rent relief program needs rethink for survival of small businesses

May 29, 2020 | 4:13 PM

HERE IN BRITISH COLUMBIA, Phase Two of the government’s restart plan is now in full swing. Small businesses that were previously closed are starting to reopen, restaurant patios are setting up tables, and school will start again voluntarily next week. While all these changes can make it seem like life is rapidly returning to ‘normal’, we cannot forget that small businesses need our help today more than ever.

The financial losses and instability of the last three months have taken their toll on thousands of businesses across the province, and many now look to government to give them a helping hand during this crucial period. Unfortunately, the B.C. government’s actions to support small businesses have fallen far short of what is needed to get them back on their feet. Central among these disappointing programs is the Canadian Emergency Commercial Rent Assistance program (CECRA).

CECRA is a joint provincial-federal program, and it was intended to throw a lifeline to small businesses struggling to pay their rent. In fact, the Canadian Federation of Independent Business (CFIB) has reported that half of all small businesses say that they will not be able to pay their rent in June without assistance. With more than 500,000 small businesses in B.C. employing more than 1 million people, that’s a big problem.

While the program is well-intentioned, there are numerous problems with CECRA. The first is that there are many onerous requirements and costs associated with participation in the program. For example, small business tenants must disclose sensitive financial information to their landlords and are subject to highly restrictive criteria that must be met.

Likewise, landlords must complete the application on behalf of their tenants, and in doing so, must also confirm the accuracy of the tenant’s financial information and eligibility for the program – something that should fall upon the shoulders of government, not landlords. These requirements also make landlords responsible for performing a financial audit of their tenants which, again, is not something for which they should be responsible.

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CECRA requires landlords to enter into a Property Owner Forgivable Loan Agreement with government, and in doing so, landlords must represent and warrant that all information, including all information provided by tenants, is true and accurate. This is both time-consuming and costly, as well as impractical. If the tenant’s information is inaccurate, the government is entitled to claw back from landlords the 50 per cent of rent the government paid thus requiring landlords to collect this 50 per cent from their tenants.

As well, while the rent relief is meant to be provided for the months of April, May and June, the government can withhold providing its 50 per cent relief until August 31, 2020 before which time the government can terminate the loan agreement. This potential delay – or even outright cancellation – will further exacerbate serious financial challenges for both tenants and landlords.

It is also noteworthy that the eligibility criteria for tenants to access CECRA funds is highly restrictive. To be eligible, a small business must have experienced at least a 70 per cent decline in pre-COVID-19 revenues. There are thousands of businesses that have seen a comparatively smaller decline in revenue and who still need significant assistance. Commercial rent support would provide considerable relief for these businesses, and yet they do not qualify for the program.

And of course, tenants are only eligible if their landlords decide to apply, which is unlikely in many tenancy situations for all the reasons noted above. This probably explains why only one in ten commercial tenants who need help qualify for CECRA and believe their landlord will participate, according to the CFIB.

Clearly changes to CECRA are needed to ensure those small businesses who really need help meeting their short-term rent obligations get help, thus also ensuring landlords keep a tenant in place that had been in good standing before the COVID-19 pandemic hit.

This is why BC Liberal Leader Andrew Wilkinson recently wrote to the premier calling for immediate action from the B.C. government to support small businesses in B.C., including a short-term rental assistance program that flows relief directly to tenants if landlords do not apply, and includes a no-eviction backstop.

It is solutions like these — designed to genuinely support small businesses — that we need to see more of in the coming weeks, as it will be gut-wrenching to watch small businesses go ‘out of business’ due in part to a lack of well-structured and practical financial support programs. The simple fact remains that there can be no economic recovery in B.C. if we can’t get small businesses back on their feet and thriving for the long-term.

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Editor’s Note: This opinion piece reflects the views of its author, and does not necessarily represent the views of CFJC Today or the Jim Pattison Broadcast Group.