Hit enter after type your search item
Home / Toronto / News / COVID-19 / Canada’s small business owners want a break on fixed costs (update)

Canada’s small business owners want a break on fixed costs (update)


A statement going viral across social media platforms from Toronto Association of Business Improvement Areas (TABIA) and Save Small Business (SSB), explains that without a reduction or waiver of commercial rent, many local businesses may have no choice but to close permanently in the coming months.

The SSB, a newly formed coalition of 30,000 small businesses and individuals from across Canada, pushing for a wage subsidy and help with rent, say that although the federal government has offered some relief for small business owners in terms of income and sales tax as well as wage subsidies, there is still a significant gap either due to ineligibility or inability to meet rent demands from landlords. Because of this void, the two groups lobbying on behalf of local businesses are making suggestions to the federal government for policy options to support commercial rent abatement.

According to savesmallbusiness.ca, nearly 70% of businesses that took their survey expect to default on their lease by May 1st, and 40% of businesses surveyed by the Canadian Federation of Independent Businesses (CFIB) did not pay their April rent in full. The burden of carrying rent while many of these small businesses are taking in little to no income is insurmountable for many local business owners.

And sadly, a number of stores and restaurants have already resorted to shuttering permanently.

The Toronto Association of BIAs is suggesting that to bridge this gap and help small businesses stay afloat while they are deemed ‘unessential,’ the federal government could initialise a commercial rent abatement program that shares the financial burden between the federal government, landlords, and tenants.

They are proposing that the federal government would reimburse 66% of any commercial rent
abatement provided by landlords to tenants, up to a maximum of $6,600 of federal support per tenancy per month for up to three months between April and July 2020 (i.e. up to $10,000 per month in commercial rent reduction from landlords). And that to be eligible for this program the business or non-profit affected by the COVID-19 shutdowns would need to have a gross annual revenue of less than $5 million in 2019.

The small business associations are also recommending that once the feds announce this sort of program tax remittance deferrals, and deferral terms from lenders, should provide flexibility for landlords to offer immediate relief on promise of future reimbursement. They also suggest a refundable tax credit for landlords who provide rent abatements.

Canada’s Prime Minister, Justin Trudeau

Meanwhile, on Thursday Justin Trudeau announced to reporters at Rideau Cottage that the federal government soon will be introducing the Canada Emergency Commercial Rent Assistance program to provide financial assistance to small and medium business for the months of April to June. The prime minister said it will be discussed with the provinces and territories tonight because the issue of rent falls under provincial jurisdiction.

Trudeau basically reiterated what he said yesterday but gave a name to the assistance program. Yesterday he said, “For others who still need help, including businesses worried about commercial rent, we’ll have more to say to you very soon.”

Ontario Premier Doug Ford

While Doug Ford in his daily teleconference from Queen’s Park said today “They definitely need support, both the businesses and the landlords.” While yesterday he said Finance Minister Rod Phillips “has been working on this with the federal government.”

“You have to realise there’s 1.2 million leases just here in Ontario and we need the support of the federal government if we’re going to look at this,” the premier said.

The federal and provincial governments will be meeting tomorrow and it is expected that the plight of small businesses will be up for discussion.

Save Small Business also understands that provincial and local governments alone are already struggling beneath the financial burden of the COVID-19 pandemic, which is why their statement is asking the feds for help.

The small business groups also point out that rent is not their only fixed expense. They are also on the hook for property taxes and utilities for premises that most of them are currently unable to access. So they suggest that because the fiscal capacity of local governments and some provinces due is under severe strain from COVID-19, a one-time federal transfer could help ensure equal access to services for all Canadians regardless of where they live.

And they also recognise the need to get financial institutions on board to help save small business from certain peril perhaps as they suggest by providing a deferral of principal and waiver of interest on mortgages for participating landlords.

The SSB plan is inspired by Australia where their federal government is helping out landlords and tenants with rent and mortgages in order to keep small businesses afloat.

It remains to be seen how the feds and provinces will work together to help save local restaurants, store owners and other small businesses, but the help can’t come soon enough.

story by Terry Lankstead

with notes from savesmallbusiness.ca

More articles from totimes.ca

  • Facebook
  • Twitter
  • Linkedin
  • Pinterest
  • Reddit
This div height required for enabling the sticky sidebar