Small businesses ask for help after Toronto landlords refuse to sign up for rent subsidies
While many small businesses are rejoicing as the Ontario-Canada Emergency Commercial Rent Assistance (OCECRA) offers rent relief, others are still worried since their landlords aren't applying.
Earlier this month, the government announced the new program to provide "forgivable loans to eligible commercial property owners" who are dealing with loss of rental income due to the ongoing pandemic.
The program helps share costs, such as rent, between small business tenants and landlords. According to the government, tenants and landlords would each pay 25 per cent of the before profit costs and the government picks up the remaining 50 per cent.
"When they first announced they were going to do something for business tenants I was like, 'Good! This is what has to happen!'" a wedding event manager told blogTO.
But the feeling of relief was short-lived, as OCECRA is voluntary.
"If they don't apply then we're going to be closing," the event manager said. "We have really no idea how they're going to act. If there was more incentive for them to take the program I would feel better."
Landlords don't have to sign up for it and many have opted not to.
"Commercial landlords don't see OCECRA to be in line with their interests at all," said Matthew Nguyen, co-owner of Tam Vietnamese Restaurant.
In fact, landlords are blaming the government and the 25 per cent of rent they need to forgo as the reason why they're not applying.
"There's a lot of unknown in respect to the guidelines," said landlord and owner of Cherry Beach Sound, Carman Guerrieri. "Until I get the details I can't do anything. I can't sign a document based on no facts yet."
Guerrieri isn't signing up to OCECRA at the moment, as he says the 25 per cent he needs to swallow seems unfair.
"The problem I'm having right now is the 25 per cent hit for me," he said in a telephone interview.
"I'm all for that support but where it falls apart [is] how does that apply in the gross rent? I'm paying for everything included in their rent. I have a commercial mortgage that can't be deferred. I can't get away with not paying my commercial loans. It's not like the residential stuff."
The guidelines are set to come out by mid-May, so many landlords are playing the wait-and-see game before they make their decision.
Ben Swirsky, co-owner of Alchemy Food & Drink, had been in conversation with his landlord about a rent deferral, and now they seem reluctant to switch to the less favourable option.
"I [dug] my own grave," said Swirsky, explaining that he's written a cheque that, under OCECRA rules, would cover him until June. But since the landlords haven't given him word on if they're going to sign up or not, he's worried about what happens come June 1 if the landlords don't sign up.
And as landlords are slow to apply for OCECRA or are outright refusing to, tenants whose full rent is due today are panicked.
"[The landlord] is going to withdraw [the] full amount [of] rent and I have to pay payroll. I don't know what's going to happen," said Clandestina and Fonda Lola owner Ernest Rodriguez, who already took out a loan last month to cover the rent and his staff wages.
"We could be locked out of our family business," owner of Nice Rack Canada and one of Guerrieri's tenants, Mike Vega said. "It would be [a] shame if a small business like ours were to go under. We're about to turn 50 and hopefully we won't be homeless and we're not unemployed."
Like many other small businesses, Vega says that due to the pandemic, his business hasn't generated any revenue since the beginning of March so he can't cover the rent, and now he's at odds with his landlord.
Vega says that he's made a couple of common area payments to cover utilities as a gesture of goodwill, but the gesture did little to appease Guerrieri.
Through a series of confrontations and emails between Vega and Guerrieri, it was made clear that failure to pay the full amount of rent on April 30 would result in repossession of the business.
"I'm not trying to kick someone out," Guerrieri told blogTO in his defence. "I've tried to come up with a remedy [but] I have a commercial mortgage that can't be deferred."
And the standoff between Guerrieri and Vega isn't unique. Many business and landlords are deadlocked with no real solutions.
"The shoddy relief efforts are only serving to drive wedges between businesses and their landlords. The shortage of answers is leading to increased anxiety across the board," said Nguyen.
But even still, some business owners are trying to make the best of a bad situation.
For example, Rodriguez is launching a new meal delivery program to bring in more revenue during this time.
"'Dinner is Ready' is a collective of two Mexican chefs dedicated to bringing authentic Mexican fare in a responsible and safe way," he said proudly.
Their current offerings include frozen entrees as well as meal kits that are fresh and ready to cook once they’re delivered. They'll also be offering a special baking kit called "Baking With Your Little Ones," which is "a fun and creative way to engage kids while we all stay home".
But this isn't a long-term solution and concerns about the future are on everyone's mind.
"The business is over until the pandemic is over," said Vega. "I don't know if we'll have enough for first and last on another premise."
"No one is talking about what's going to happen beyond June," said Swirsky. "Am I gonna have to reopen with 50 per cent capacity? My margins were razor thin before. I don't know how I can do it with half the capacity."
"I'm hoping this is going to go back to normal but if [doesn't], then we're going to have to close," Rodriguez said.
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