Skip to content

Provincial business leader warns of coming 'wave of bankruptcies'

Overhaul of emergency rent relief program is 'critical,' says Ontario Chamber of Commerce president echoing earlier calls from local political leaders
2020_08_19 AMO 2020_JG
AMO held an open plenary session entitled, the Path to Economic Recovery in Ontario, which hosted Diane Brisebois, president and CEO of the Retail Council of Canada, along with Rob Phillips, the Minister of Finance for the province of Ontario, and Rocco Rossi, president and CEO of the Ontario Chamber of Commerce. Jennifer Golletz/ CollingwoodToday

Leaders of Ontario’s business sector say more needs to be done to save the province’s small and medium businesses from a wave of bankruptcy in the wake of the COVID pandemic.

“The one thing that we hear every day is that the program does not work. One of the areas that we can help to avoid bankruptcies is to look at the CECRA (Canada Emergency Commercial Rent Assistance) program,” says Diane Brisebois, president and CEO of the Retail Council of Canada.

The CECRA program is a joint initiative between the federal and provincial governments, which was established to provide relief for small and medium businesses experiencing financial hardship due to COVID-19.

The program offers unsecured, forgivable loans to commercial property owners to reduce the rent owed by their impacted small business tenants.

The loans will be forgiven if the mortgaged property owner agreed to reduce the eligible small business tenants’ rent by at least 75 per cent for April to June, which will include a term not to evict the tenant while the agreement is in place.

The small business tenant would have to pay 25 per cent of the regular rent fee and the government would provide the forgivable loan for 50 per cent of the rent, leaving the landlord short 25 per cent of the rent.

So, if a tenant business was paying $400 in rent, the government's rent assistance program would require the tenant to pay $100 to the landlord, the government would provide $200 to the landlord, and the landlord would not be able to recover (now or post-pandemic) the remaining $100.

“If there is one message I would have, not only does it need to be tweaked, it is flawed,” Brisebois said.

The Association of Municipalities of Ontario (AMO) held its annual conference this week from Aug. 17 to 19.

On Wednesday morning, AMO held an open plenary session entitled, the Path to Economic Recovery in Ontario, which hosted Brisebois, along with Rob Phillips, the Minister of Finance for the province of Ontario, and Rocco Rossi, president and CEO of the Ontario Chamber of Commerce.

“While it is helping some people, the reality is it is a fraction ... The system’s design is flawed,” echoed Rossi.

Rossi said the vast majority of small-to-medium-size businesses entered the pandemic with 20 to 30 days of cash on hand. Now in month five of the global pandemic, he says that 20 to 30 days worth of cash is long gone.

“All of those deferred revenues, HST, income taxes, workers compensation… that money has been spent. When the bill comes due, one of three things will happen. One, we will kick the can further down the road. Two, there will need to be a certain amount of forgiveness, which will eat into contingency funds. Three, we will have a massive wave of bankruptcy, the likes of which we have never seen. This is critical,” Rossi said.

According to Rossi and Brisebois, aside from payroll, the single biggest cash cost businesses face is rent. And while the CECRA program attempts to ease the pain for local businesses, it is not doing enough.

Rossi and Brisebois are not alone in their pleas for changes to the program, local representatives across the province have been speaking out on the issue since the onset of the program, including Member of Parliament for Simcoe-Grey Terry Dowdall and Town of the Blue Mountains (TBM) councillor Peter Bordignon, who spoke about how the issue was affecting local businesses in late May.

“To be fair, this program provides zero incentive for a landlord to participate,” said Bordignon, adding that like many other communities across Ontario, small businesses are the backbone of TBM’s economy.

“Businesses in TBM are directly affected, more than most, as we do not have malls or big-box retailers. Our merchants are local and the fabric of our community,” Bordignon said. “I have already been told about two significant local businesses that will not reopen because of financial reasons directly related to rental expense.”

Rossi adds that only a fraction of the qualifying businesses have been able to take advantage of the program because the program has been designed so poorly.

“It puts way too much emphasis on landlords. We are seeing very different outcomes for the businesses that are exactly the same, with different landlords... that is not fair and that is not getting the job done. We want the federal and provincial governments to sit down and look at how we can improve this,” Rossi said.

Phillips says the CECRA program is federally run due to the size and scope of the compensation required.

“We are dependent [on the federal government] in the case of this program because of the volume of this, with 1.2 million commercial leases in Ontario alone,” Phillips said. “The size and volume of this requires a national program and that's what the federal government brought forward. But, we remain open to listening right now.”

Phillips says that despite calls for the program to be reworked, 35,000 small businesses across Ontario are currently taking advantage of the CECRA program.

“These programs have been designed in a very short timeframe to meet the needs, and where they are not meeting the needs, the federal government has been fairly willing to adjust things,” Phillips said. “This is a once-in-100-years global health crisis. We will find our way through this, but you know, we're going to have to find our way through it together and there are going to be sacrifices along the way.”


Reader Feedback

Jennifer Golletz

About the Author: Jennifer Golletz

Jennifer Golletz covers civic matters under the Local Journalism Initative, which is funded by the Government of Canada
Read more