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Trudeau Rolls Out Forgivable Loans for Commercial Landlords

Trudeau Rolls Out Forgivable Loans for Commercial Landlords

(Bloomberg) -- Canadian Prime Minister Justin Trudeau unveiled a government program on Friday that aims to reduce rents for the country’s small businesses by 75%.

Commercial property owners will be eligible for loans to cover 50% of the rent over three months beginning in April, Trudeau said Friday in Ottawa. The property owner will be expected to kick in 25% of the rent, and the tenant the other 25%, according to a statement from Trudeau’s office.

Trudeau Rolls Out Forgivable Loans for Commercial Landlords

It’s the latest in a series of government programs designed to prop up an economy battered by the pandemic and collapsing oil prices. Businesses with fewer than 500 workers, which account for 90% of the country’s employment, are bearing the brunt of nationwide commercial shutdowns.

“We know certain businesses are extremely hard hit which is why access to credit and support for rent is going to be important,” Trudeau told reporters. “But we also see this is as the greatest economic impact and event of our lifetimes, and it is going to be extremely difficult.”

The loans will be forgiven if the landlord agrees to lower rent by at least 75%, and agrees to not evict a tenant while the program is in place. Businesses paying less than C$50,000 a month in rent and “who have temporarily ceased operations or have experienced at least a 70% drop in pre-COVID-19 revenues” will be eligible, as will non-profits and charities, according to the statement.

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Finance Minister Bill Morneau told BNN Bloomberg in an interview the rental program would cost “roughly” C$2 billion. The federal government will cover 75% of the cost, with provincial governments putting in the rest. A separate rent alleviation program for large businesses will come soon, Morneau said.

“This is welcome news, but many business owners with dramatic revenue losses will not qualify for the program,” Laura Jones, executive vice-president at the Canadian Federation of Independent Business, said in a statement. “More help from provincial governments to cover those falling through the eligibility cracks of federal programs is needed to get through this. The limitations of these programs underscore the need to get businesses back in business as soon as it’s safe to do so.”

The government has already implemented a 75% wage subsidy program for businesses whose income has been hit by Covid-19, as well as access to C$40,000 in credit.

Medical authorities are currently reporting 42,750 cases with 2,197 deaths, according to Health Canada.

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