Justin Trudeau announces program to lower commercial rents by 75%

OTTAWA-The federal government has agreed with all provinces and territories to provide significant rent relief for small and medium-sized businesses that are shuttered or suffering steep losses during the coronavirus pandemic, Prime Minister Justin Trudeau announced Friday.

Speaking outside Rideau Cottage, Trudeau said the new program will lower rents for eligible businesses by 75 per cent for payments due in April, May and June.

The government will provide forgivable loans to commercial landlords that cover half of the rent they are owed for those three months if landlords agree to drop rents by 75 per cent, according to a news release from Trudeau's office. The commercial tenant would still need to cover the remaining 25 per cent.

The program will apply to businesses that pay less than $50,000 per month in rent and have lost 70 per cent of their revenue during the crisis, Trudeau said.

"This is an extremely difficult situation for Canadians, for businesses right across the country," he said. "We are trying to help as many people as possible."

The prime minister signalled last week that Ottawa was working with provinces and territories to create loans to help businesses cover rent during the national shutdown to curb the spread of COVID-19.

Finance Minister Bill Morneau added later Friday that the forgivable loans will be delivered through the Canada Mortgage and Housing Corporation, with the provinces covering 25 per cent of the cost.

He said landlords will receive loans for 50 per cent of the rent they are owed if they agree to lower rent by 75 per cent. Landlords and tenants would then split the remaining half of the rent, Morneau explained.

"That will enable the landlord to have confidence that, in their situation, they'll get 75 per cent of the rent paid, and the small business to know that they're going to get a 75 per cent reduction," he said.

"We're looking forward to seeing a very positive situation for tenants and also for landlords, who can now have more confidence that their tenants will be able to stay in the property."

Dan Kelly of the Canadian Federation of Independent Business (CFIB) told the House of Commons finance committee on Thursday that more than half of his group's 55,000 members say they can't afford to pay their rent that is due May 1.

Restaurants across the country are struggling, Daniel Lefebvre, vice-president of the industry group Restaurants Canada, also told the committee by video conference.

Without immediate rent relief, Lefebvre said the industry will suffer a "carnage" of mass closures. He called for a moratorium on commercial rent payments, as well as government subsidies to businesses based on their 2019 revenues.

In a statement Friday, the CFIB welcomed the new rent relief but warned it might be too complicated for some businesses and too reliant on landlords to administer. The federation also flagged how some businesses that have been hit hard will fail to qualify because of the requirement for 70 per cent lost revenue.

Asked whether the government waited too long to bring in this new rent relief, Trudeau said the government's first priority during the crisis was to make sure businesses had ready access to lines of credit to stay afloat as the economy shut down.

The government has already rolled out aid measures for businesses, including a $73-billion program to cover up to 75 per cent of the wage costs for any business or charity that saw revenues drop by 15 per cent in March and 30 per cent in April and May.

But even with this wage subsidy, Trudeau said Friday the government realized fixed costs are still a challenge for businesses and co-ordinated rent relief was necessary.

Ottawa is also offering $40,000 interest-free loans to small businesses and charities through the Canada Emergency Business Account. The independent Parliamentary Budget Officer (PBO) estimates these loans will cost the government $9.1 billion in the 2020-21 fiscal year, according to an analysis published Friday.

The government's export credit agency, Export Development Canada, is using $20 billion to guarantee 80 per cent of new loans to small and medium-sized businesses, which the PBO estimates will bring the government $3 million in revenue during the current fiscal year.

As the economy has slowed amidst travel restrictions, mandatory business closures and social distancing pleas, there has been a chorus of business representatives and political parties calling for increased aid to certain sectors and expanded relief for individuals.

Trudeau stressed Friday that the government - which has already rolled out more than $140 billion in new spending during the pandemic - will do what is necessary to make sure Canadians get the help they need.

"This government will help Canadians who need help - period," the prime minister said.

"We know certain businesses are extremely hard-hit and that's why the access to credit and the support for the rent is going to be important. But we also see that this is the greatest economic impact and event of our lifetimes, and it is going to be extremely difficult."

Alex Ballingall is an Ottawa-based reporter covering national politics for the Star. Follow him on Twitter: @aballinga