N.S. small businesses say rent deferral program places full burden on them

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N.S. small businesses struggling with rent problems
On Friday Premier Stephen McNeil introduced a rent deferral program to help businesses. But as Alicia Draus reports, small businesses say the program isn’t much help – Mar 30, 2020

Across the province, small businesses are being forced to shut down to adhere to provincial regulations set out in the Public Health Act.

Many, like DeeDee’s Ice Cream, a small family run business with two locations, has been forced to lay off their employees in an attempt to weather the storm.

“Most of my employees have worked for me for between three and five years. So to lay them off was a super difficult decision,” said owner of DeeDee’s Ice Cream Ditta Kasdan.

READ MORE: Nova Scotia business owner ‘concerned’ over struggle to pay rent during coronavirus outbreak

But even without payroll, there are still many bills to pay, including rent, and utilities.

In an effort to help small businesses, on Friday the Nova Scotia Government introduced the rent deferral program, which encourages landlords to defer rent for three months for businesses forced to close under the public health order.

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As part of the effort, the province guarantees up to $5,000 a month for landlords if that business goes under.

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But small businesses are raising concerns that it does little to help them.

“The rent deferral program that our Premier has put forward on Friday is going to put most businesses out of business,” said Lara Cusson, chairwomen of the Nova Scotia Small Business Affiliation.

“It’s putting all the burden on small businesses. So if we defer our rent by three months, even six months, we still have to pay back that rent, but we’ve never made that revenue.”

READ MORE: Live updates: Coronavirus in Canada

Cusson has written a letter to the Premier calling for a more equitable solution.

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“We need to share this burden with landlords, with the banks. We need some sort of collective collaborative effort to keep businesses alive and sustainable.”

Already over 200 businesses in the province have signed the letter, including Kasdan.

Click to access letter-9.pdf

“I totally disagree with the whole deferral idea,” said Kasdan, who would instead like to see some form of aid to help reduce debt.

“Our profit to revenue ratio is super super small as it is, and deferring debt just means deferring a huge struggle when we get back.”

But in an emailed statement from the Department of Business the province says it has “no intention of interfering or dictating commercial relationships.”

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During an update on the Province’s response to COVID-19 on Monday, Stephen McNeil said this program acts as a way to help businesses, and it doesn’t mean that businesses will be required to pay the rent immediately when they re-open.

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“This is meant quite frankly to take pressure off them right now,” he said.

“They can work with their landlord to spread that over the life of their lease, that could be two years, if its shorter than that then the landlord could have the responsibility to extend it beyond that period of time.”

But Kasdan says it’s still not good enough. She says many businesses like her own can’t afford to take on any extra debt and she’d like to see the province do something to help alleviate their debt, not add to it.

“It’s like with big oil corporations, huge fisheries companies. We seem to always have money to give them to operate and somehow small businesses are always expected to be self-sufficient and resilient on their own,” said Kasdan.

Federal help needed

Meanwhile on the federal level, over the past few weeks, the government has been dolling out benefits aimed at helping Canadians and businesses get through this pandemic. For businesses, the federal government has introduced loans, and wage subsidies.

Many small businesses say neither will keep them from going bankrupt if they have to stay closed for months.

“Their fixed costs continue, so those are things like rent or other things like debt they made be paying on inventory or other things they are holding, and that is likely what will bankrupt them if this crisis is to continue for months on end,” said David MacDonald, an economist with the Canadian Centre for Policy Alternatives.

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MacDonald says it’s important to note that things are changing almost daily, and it is possible the federal government will introduce more aid for businesses in coming days.

“What we may see over the coming days is some sort of basic support for small businesses, that’s going to cover the bare minimum of fixed costs,” said MacDonald.

“If they go bankrupt in the meantime that will mean the economic impacts will be more widespread, we wont just have a rapid restart of the economy we’ll have a much slower and damped down restart of the economy because these businesses go bankrupt.”

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