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Small businesses struggling with rent thrown a lifeline
VANCOUVER -- What a difference a day makes. This week, Restaurants Canada predicted a third of B.C.’s 14,500 restaurants would fail without government intervention. Rent payments have been one of the biggest burdens for small businesses during COVID-19 closures, including restaurants.
The message has been received, with the federal government and the provinces offering more help with the Canada Emergency Commercial Rent Assistance program.
“This program will provide support to help small businesses with their rent for the months of April, May and June,” Prime Minister Justin Trudeau announced on Thursday.
Details still need to be worked out with the provinces, which set rent policy, but it’s expected the program could provide some forgivable loans to ease the pressure of paying commercial rent.
“It’s hugely beneficial for us as a restaurant. It could literally make or break us here,” said Darren Keane, manager of Vancouver’s OEB Breakfast Co.
His restaurant, like many others, has been working with the landlord to buy time, but the federal announcement is a huge relief.
“(It) provides our members with some confidence that they will be able to stay open, and be able to pay some of those operating costs until they can once again open under social distancing measures,” said Mark von Schellwitz, Restaurants Canada’s vice-president of Western Canada.
The federal government is also relaxing the rules on the Canada Emergency Business Account for those small businesses that had fallen through the cracks. Interest-free loans of up to $40,000 had been made available to businesses and non-profits with payrolls between, $50,000 and $1 million. Now, it’s been expanded to include those who paid between $20,000 and $1.5 million in total payroll in 2019.
If the company can repay the balance of the loan by the end of 2022, up to $10,000 will be forgiven.
The B.C. government has also offered more help in the way of commercial property tax relief, by reducing the school tax portion of property tax bills. The province says it could amount to an average 25 per cent reduction in the total commercial property tax bill for most businesses, providing up to $700 million in relief. It follows a previous 50 per cent reduction to the provincial school property tax rate.
“If I’m putting on my small, medium-sized business lens, I’m thinking: ‘Hey, today I’ve been given a little bit more life support and some extended cash runway to make it through this crisis,’” said Val Litwin, president and CEO of the BC Chamber of Commerce.
Litwin also hopes improved access to federal emergency loans will broaden the definition of how payroll is considered and take into account entrepreneurs who don’t have employees, per se.
“One might be entrepreneurs who pay themselves dividends, not through a payroll mechanism, so a T5, but also contractors would be a T4A right now - this just applies to T4s,” he said.
The good news is that these programs are being tweaked to accommodate those in need, but many businesses like OEB aren’t just waiting for handouts. They are getting creative, doing whatever they can to stay afloat. However, revenues are still way down and the majority of their employees have been furloughed.
“Whatever the government can do to help us out in this time of crisis is a benefit, these days more than ever,” said Keane.