Small businesses facing cash crunch as rent comes due amid coronavirus restrictions
VANCOUVER -- Six weeks after many B.C. businesses were forced to close their doors to slow the spread of the coronavirus, many are now facing a cash crunch at the worst possible time.
With commercial rents due on Friday, and despite a federal program meant to help alleviate the burden, some business owners say they do not have enough money in the bank to cover what they owe.
“We know from many small business studies that 75 per cent of small businesses have less than two months' cash on hand and it’s now been two months. So it’s exactly what you would expect to happen,” said Jon Shell of the national grassroots organization Save Small Business, which was formed in mid-March.
The Canada Emergency Commercial Rent Assistance Program is supposed to address this very issue.
Qualifying businesses pay 25 per cent of the monthly rent, and the government chips in 50 per cent, leaving the landlord to cover the remaining 25 percent.
But according to Shell, many landlords are refusing to get onboard with the program.
“If a landlord believes they can get a deferral deal instead of this deal they would usually take the deferral because it gives them 100 per cent of their rent,” said Shell.
Save Small Business is one of a handful of groups that signed a letter to all 13 provincial and territorial premiers calling for a moratorium on commercial evictions for the duration of the pandemic.
It also calls for for CECRA to be made mandatory for all landlords with commercial tenants who qualify for the program.
David Ian Gray, a retail advisor with DIG360, says many landlords see it in their best interest to work collaboratively with their tenants but there are many others who have taken a more adversarial approach.
“A sizeable number of landlords (are) acting in their self interests, within their legal rights, but they’re making a bad situation so much worse,” he said.
Gray says the virus will be an unfortunate death knell for many small businesses right across the country, and some may choose to shut down early specifically because of the uncertainty around their rents.
“We don’t know how the next few months are going to go. If (landlords) haven’t proven that they have our back now, they’re not going to have our back later. Maybe we just shut down now and cut our losses,” he said.
According to Shell, 70 per cent of jobs in Canada are in small businesses.
“If one small business employs 10 people in a local community, and that business isn’t there coming out of this, those are ten jobs that simply don’t exist,” he said as he stressed the need for a moratorium on commercial evictions.