Canada The coronavirus rent subsidy caps how much business chains can get. Is that unfair?

00:10  27 november  2020
00:10  27 november  2020 Source:   globalnews.ca

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The Federal Government is expecting more businesses to sign up to its JobKeeper coronavirus wage subsidy program as the first round of payments Treasurer Josh Frydenberg said while he expected more businesses would sign up for JobKeeper, he remained adamant the program wouldn't be

The subsidy is the central plank in a 0 billion economic stimulus package, the third and largest package the Government has announced in response to the coronavirus . Prime Minister Scott Morrison said he expected 6 million Australians would access a so-called JobKeeper payment for the

The Canadian Chamber of Commerce is calling on the government to remove the cap on how much chain restaurants and businesses with multiple locations can receive under the coronavirus rent subsidy.

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But a business expert says a cap is important and that there are difficult conversations that need to be had about which businesses and locations are viable in a dramatically changed world.

In a letter sent to Deputy Prime Minister Chrystia Freeland on Monday, Chamber of Commerce President Perrin Beatty said while the support offered in the rent subsidy is "critical" for businesses, the cap of $300,000 on multi-unit businesses is an "unfairness" to chains and their owners.

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It is understood that the wage subsidy will apply to firms where bosses have already had to lay off workers due to the coronavirus , as long as they are The Resolution Foundation think tank also said the package was "hugely welcome", reaching lower-paid workers that were most at risk of job losses.

But how long will that take, how much of their business will be affected, and what will the interruptions/headaches look like?" Several nonbank lenders are also raising minimum credit scores for FHA loans, which are generally used by borrowers with lower scores and lower down payments.

"We hope that the government will take a second look at the cap," he said.

'We want to make sure that that everybody is treated equally."

Read more: Want to apply for the new coronavirus rent subsidy program? Here’s what to know

Under the rent subsidy program, a sliding scale based on how great a decline in revenue a business has seen because of the pandemic determines what percentage of a subsidy for eligible rent-related expenses that business can get.

In effect, those who see very little revenue drop will qualify for very little rent assistance, while those hit hardest will qualify for the most.

Each business's eligible subsidy is capped at $75,000.

The rules are different for what are deemed "affiliated entities," though. Entities — businesses, non-profits, charities — with more than one location will be capped at $300,000 in subsidies between all the locations.

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Mo Jessa, president of the Earls Kitchen + Bar chain of restaurants — which has 57 locations in Canada and 10 in the U.S. — called the cap "arbitrary" and said while the company has been using the wage subsidy, it isn't enough.

"There's a mistake. It's not fair," he said. "It can easily be corrected by removing the cap and allowing everybody to participate if they're down in sales."

The rental subsidy rolled out on Monday effectively replaced an earlier model that was widely criticized for requiring businesses to rely on their landlords to apply.

The new program allows businesses to apply directly, and Freeland said on Monday that the goal is to help bridge "viable" businesses through until restrictions can be reduced.

“It would be so tragic for any viable charity, businesses, non-profit to make its way through the pandemic only to falter now that the end is in sight,” she told journalists on Monday.

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“This support is here now to prevent that from happening.”

Read more: Canadian businesses struggling with debt as 2nd coronavirus wave looms: study

Global News asked Freeland's office whether it planned to modify the program to remove the cap.

Her office wouldn't say, but noted the rental subsidy is only one part of a broader range of supports available to businesses, including newly-announced lockdown support of 25 per cent of rent-related expenses with no caps for any business forced to shut down because of a public health order.

There's also the wage subsidy, which initially covered 75 per cent of employee wages for eligible businesses and now uses the same sliding scale as the rental subsidy, as well as the Canada Emergency Business Account, which provides interest-free loans of up to $40,000 for small businesses.

One government source said officials are open to hearing feedback about the program and while it's possible the criteria for the program could change, there are no plans to do so right now.

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Jenifer Bartman, a business adviser and chartered professional accountant, said the challenge is that while businesses with multiple locations are hurting, so is everybody else, and the government is likely trying to find a way to balance out the amount any one company can get.

"I think it's a bit of a difficult situation if there aren't any caps in terms of how much can companies receive," she said, noting that businesses that are larger tend to also have more resources they can turn to for help, though that isn't the case for all of them.

"They might have some cash reserves that they can use. They might be able to go to additional financial partners and see what types of arrangements that they can make there," she continued.

"Maybe that's part of the thinking here: how do we make it fair and how do we help as many businesses as we can, and how do we make sure that the larger ones aren't taking more of their share?"

Bartman noted that part of the many difficult questions facing businesses right now also revolve around both how well they are able to adapt their operations, as well as the core issue of viability.

"It's not as if these companies are not eligible for anything. They are getting assistance on the salary side and hopefully that does allow through continued operation, at least in some places, of takeout orders, curbside pickup, that type of thing," she said.

"There also has to be some consideration here as we look forward over the next year or so: how many locations do we need?" Bartman continued, pointing to changing work and social dynamics caused by the pandemic.

"Those are not easy conversations, but I think that's the reality that we're in."

With files from Global's Abigail Bimman.

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