'We didn't have the money': Small businesses struggling to pay rent during pandemic
EDMONTON -- An Edmonton business owner says he could be facing bankruptcy if he doesn’t get rent relief, and an advocacy group for small businesses in Canada says he’s not alone.
Dave Calhoun is the president of Axe Monkeys Franchising, which operates rec rooms that include axe throwing. He shut his Edmonton business down on March 14 because of COVID-19, and with it, he shut out his revenue.
“I think we sold like $150 worth of gift certificates in two months whereas typically we would have a lot more revenue than that,” Calhoun said. “It means we can’t pay all our bills.”
Calhoun said he first paid 10 per cent of his business’ $8,500 rent, as per how he understood his lease, but was told by his landlord he was misunderstanding the lease. About a week ago, he paid 25 per cent of the rent for both April and May, hoping his landlord would opt in to a federal rent relief program announced back on April 24.
Under the Canada Emergency Commercial Rent Assistance (CECRA), Ottawa said it would lower the rent by 75 per cent for small businesses that pay less than $50,000 each month in rent that have also temporarily halted operations or have experienced at least 70 per cent drop in revenue since before COVID-19. It’s available to non-profits and charities and is applied retroactively to April, May and June rent.
But the plan relies on a landlord opting in, and agreeing to cover 25 per cent of the rent.
In an email to Calhoun, his landlord, Pinnacle International Realty Group, indicated that without more details from Ottawa, they couldn’t commit to taking part in the program. When Calhoun didn’t pay 50 per cent of his rent, as asked for by the landlord, he was threatened with legal action.
“We’re a new business. We’ve only been open since September. We didn’t have the money,” Calhoun said.
The Canadian Federation of Independent Businesses said based on its survey, 64 per cent of Alberta small businesses say governments have been too slow with rent assistance, and over half (52 per cent) say rent relief could make the difference in their business surviving.
CFIB has asked the government to allow commercial tenants who are eligible to access the 50 per cent government portion of the CECRA directly if their landlord does not wish to participate.
Anton Margulis, the developer behind Manchester Square who is also the landlord for about 30 properties in Edmonton, believes CECRA wasn’t well thought through and needs to be amended. He said many landlords can’t afford to cover 25 per cent of the cost, and their profit margins are much smaller than that.
“You can’t give something you don’t have,” Margulis said.
“Our banks will never let us apply for it the way it is right now. They just won’t stand by us. If we lose our banks, we lose our buildings.”
Margulis said he discussed having some of his tenants pay him 50 per cent of the rent, but then accept the 50 per cent government funding that is being offered once CECRA begins, but was told by his lawyer that would be illegal.
“Legally, the government won’t let us,” he said.
Canada Emergency Commercial Rent Assistance is being operated by the Canada Mortgage and Housing Corporation. Its spokesperson Angelina Ritacco said program details will be available soon and it is on track to open the application process the second half of May.