Federal boost for small businesses leaves giant loophole
VANCOUVER -- Mark Reddekopp is worried about the future.
The president and co-owner of Gallery Jones Fine Art on an industrial stretch of Vancouver’s East 1st Avenue has cancelled shows and struggled to make sales.
“In the art business, you’re always worried about your bottom line,” Reddekopp said.
And that uncertainty, Reddekopp said, has only been heightened by the COVID-19 pandemic.
So when the federal government announced the Canada Emergency Commercial Rent Assistance Program (CECRA) last month, Reddekopp was feeling optimistic, until he read the fine print.
Because one of the program’s eligibility requirements is that the landlord have a mortgage.
How CECRA works
Property owners who apply for CECRA commit to paying 25 per cent of their tenant’s rent. In return, the federal government picks up 50 per cent of the rent through a forgivable loan to the landlord, that is applied directly to the mortgage. The tenant pays the remaining 25 per cent.
The program offers assistance for the months of April, May, and June, and can be applied retroactively.
But Reddekopp’s landlord can’t even apply, because he doesn’t have a mortgage.
Daniel Cheung, who describes himself as a "mom and pop" property owner, told CTV News that, like his tenant, the way the new program is designed means he falls through the cracks.
"How am I going to help (my tenants) even if I wanted to?" Cheung asked.
Cheung said he’s offered to defer rent for a few months, but to do more, he needs additional incentives or support.
"I also have to protect my business," Cheung said, calling CECRA as it stands, "incomplete."
NDP MP: 'Not good enough' for small businesses
East Vancouver NDP MP Jenny Kwan, who wrote an open letter on May 1 to the cabinet committee on the federal response to COVID-19, was even more direct in her criticism about what she called CECRA’s shortcomings.
“It has to be effective, it has to work for the people on the ground. And this program as it stands right now, is not good enough,” Kwan said.
She advocates changing or adding to the program so that eligibility is not contingent on the landlord having a mortgage.
Canada Mortgage and Housing Corporation, which will administer CECRA, told CTV News in a statement that it’s working on another option.
"For those commercial property owners who do not have a mortgage but want to access (CECRA) for small businesses, an alternative mechanism will be implemented under the same eligibility terms. Further information will be outlined in the near future," a CMHC spokesperson wrote.
Kwan worries what that might mean for property owners who don’t want to apply.
She said she’s pushing government for a mechanism to allow small businesses to be able to make an application themselves, calling them the "economic engine" of Canada.
"If (the Liberals) are going to take that approach, that means all of Canada is going to have to pay the price, and that’s not good enough,” Kwan added.
Back at the gallery on East 1st Avenue, Mark Reddekopp was hopeful, but still worried.
"You’re always worried about the next six months or what the next year looks like.” he said.