July 3, 2020  by

MEDIA: So Many Questions, As the COVID-19 Commercial Rent Program is Extended

Pleased to chat with the Ottawa Bureau of The Canadian Press about the extension of the Canada Emergency Commercial Rent Assistance (CECRA) program.  Next to payroll, the most significant item for a company to fund is often its premises, be it by way of rent or a mortgage.  Whatever the structure, both of these represent cash outlays for a business.

COVID-19 has resulted in significant revenue declines for many, if not most companies; some have lost a relatively moderate percentage of income (say, 25%), while others have faced declines of 50% to 100%, in some cases.  Although wage subsidy programs have helped to retain staff, fixed expenses (including rent) represent a steep funding challenge for many small businesses.

CECRA’s structure requires landlords to apply, leaving many tenants in a tenuous and uncertain situation.  In the event that their landlord does not apply, for whatever reason, tenants may be left with some very difficult decisions to make about the future feasibility of their company.

An important question to consider is this: Who benefits when businesses are forced to close, simply because they are unable to cover all of their expenses due to the impact of a global pandemic?  Recognize that these unusual days will not last forever, and in the context of a company’s existence, may represent a short period of time.

When businesses fail, jobs and economic wealth are lost and their leased premises are left empty; this leaves landlords with rental spaces to fill, at the worst of times.  Financial partners who hold a mortgage on these properties might find their borrowers in a weakened financial position or in default, at which point, another important question comes to mind: Now what?

This is why the structure of these programs, in practical terms, is so important.  With what seems to be relatively low uptake of the CECRA program thus far, did the Federal government get it right?  Are landlords thinking carefully about the implications of not applying to the Program?  And where will the future of Canada’s small business community, the backbone of our economy, be left in all of this?

Jenifer Bartman
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