By Mario Toneguzzi

The federal government moved Thursday to offer additional support to small businesses in Canada who are facing economic hardship and uncertainty during the COVID-19 (coronavirus) pandemic.

Prime Minister Justin Trudeau announced the following new measures to support Canadian businesses so they can keep their doors open and their employees on the job:

Expanding the Canada Emergency Business Account (CEBA) to businesses that paid between $20,000 and $1.5 million in total payroll in 2019. This new range will replace the previous one of between $50,000 and $1 million and will help address the challenges faced by small businesses to cover non-deferrable operating costs. Since the launch of the CEBA on April 9, more than 195,000 loans have been approved by financial institutions, extending more than $7.5 billion in credit to small businesses; and
The government intends to introduce the Canada Emergency Commercial Rent Assistance (CECRA) for small businesses. The program will seek to provide loans, including forgivable loans, to commercial property owners who in turn will lower or forgo the rent of small businesses for the months of April (retroactive), May, and June. Implementation of the program will require a partnership between the federal government and provincial and territorial governments, which are responsible for property owner-tenant relationships. It is working with the provinces and territories to increase rent support for businesses that are most impacted by the pandemic and we will have more details to share soon.

"We will always be there to support our Canadian businesses. That is why we are working closely with the business community to make sure that our emergency measures are as effective and inclusive as possible. Expanding the Canada Emergency Business Account and making sure businesses can afford their rent is the smart thing to do. Small businesses are the backbone of our communities, and will keep our economy strong in this uncertain time,” said Trudeau.

These measures are part of the Government of Canada's COVID-19 Economic Response Plan, which has committed more than $107 billion.

"We are committed to helping Canadians through this difficult period. By making the Canada Emergency Business Account more accessible and introducing new measures to support businesses, we are positioning them to be ready for the recovery that will come. We will continue to do whatever it takes to ensure that Canadians are supported through the outbreak, and that our economy remains resilient during these challenging times,” said Bill Morneau, Minister of Finance.

Michael Kehoe, broker/owner of Fairfield Commercial Real Estate in Calgary and Lead Ambassador in Canada for the New York-based International Council of Shopping Centers, said the proposed financial assistance for small business related to rental payments announced by the Prime Minister is welcome news to everyone, especially in the commercial real estate transactional chain.

“It is important that the proposed program be rolled out quickly to provide a financial bridge until the situation returns to a sort of new normal that will likely occur over time. Retail and restaurant tenants in particular will also need cooperation from their landlords and their municipal governments well into this summer when people will hopefully feel comfortable venturing out again for non-essential shopping and restaurant dining,” said Kehoe.

“It could be six to eight months after that subject to the status of the virus for any kind of normalcy to set in, with consumers spending, tenant’s cash flowing in a positive manner with the full ability to pay full contracted rents and occupancy costs. Everyone in the transactional chain should be assisting to help each other at this critical time and it is nice to see the federal government talking about stepping up.”

He said the government rent relief payments will be an important lifeline as the weeks could turn into months for any kind of recovery to occur.

“This could ensure that the entire consumer real estate industry would avoid being jeopardized causing long-term damage, rampant unemployment and irreparable harm to the numerous related, commercial sectors. This will help tip the odds for small business survival and ensure there is a commercial sector left to serve consumers in communities across Canada post crisis,” added Kehoe.

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Grace Yan, a commercial real estate agent with Coldwell Banker Mountain Central in Calgary, said deferrals, loans and more debt are not viable relief measures for businesses.

“Businesses need a more generous stimulus package and faster processing with no strings attached. The limit needs to be increased from $40,000 to at least $200,000 payable 2022. A forgivable loan program should be in place designed to ensure that businesses do not lay off employees,” said Yan.

“The longer this persists the less businesses will survive and that requires support from all levels of government. The current relief offering has too many strings attached and too many delays. In order to provide true relief to businesses the government needs to provide relief to the banks to pass on to businesses and consumers. A call to action is essential. Governments need to support businesses otherwise people will not have jobs to go back to. Fast tracking funding to businesses is imperative.”

In a statement, Dan Kelly, President, and Laura Jones, Executive Vice-President, Canadian Federation of Independent Business (CFIB), said it is clear that the government has been listening to the concerns raised by the CFIB and small business owners across the country with today's significant change to CEBA. Reducing the wage floor from $50,000 to $20,000 and raising the ceiling to from $1 million to $1.5 million will allow thousands of additional small firms to access this important program. Still, brand new firms, the self-employed and those that pay with dividends only will remain excluded from CEBA.

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“After their wage bill, commercial rent is the second largest expense for most SMEs and this important fixed cost has been left out of most current federal and provincial programs. The Canada Emergency Rent Assistance Program is the first major, Canada-wide initiative to support small businesses with this giant expense as we head into a second month of a virtual shut-down of the small business economy. Provincial governments now need to offer additional financial support and ensure that commercial tenants won't be evicted due to COVID-19. Other than Saskatchewan and Nova Scotia, provincial governments have been slow to come to the table to offer support with rent despite the fact that it is provincial governments that have ordered SMEs to close,” said the CFIB statement.

The organization said 80 per cent of small businesses are completely or partially shut-down in order to stop the spread of COVID-19. The average small business owner pays $10,000 in commercial rent and these bills have not stopped. CFIB's research found that 90 per cent of small business owners wanted their provincial governments to offer such assistance.

Mario Toneguzzi, based in Calgary has 37 years of experience as a daily newspaper writer, columnist and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, city and breaking news, and business. For 12 years as a business writer, his main beats were commercial and residential real estate, retail, small business and general economic news. He nows works on his own as a freelance writer and consultant in communications and media relations/training. Email: mdtoneguzzi@gmail.com

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