We previously published an estimate that the cost of the Canada Emergency Commercial Rent Assistance Program will be $483 million. This post provides additional detail regarding the calculations underlying that estimate.
We estimate that non-residential rent expenditures in 2020 would have been $65 billion.
Of that $65 billion in non-residential rent, approximately $21 billion would have been paid by businesses in sectors where small businesses may have suffered 70% revenue declines.
Of that $21 billion, approximately $6.4 billion would have been paid by businesses with less than $50,000 in rents per location and less than $20 million in annual revenue. As an illustrative example, about 21% of non-residential rent paid by food services and drinking places was paid by businesses with less than $50,000 in rents per location and $20 million in annual revenues.
Of that $6.4 billion per year, $1.6 billion would be due in the three months eligible for forgivable loans under the Canada Emergency Commercial Rent Assistance Program. We assumed that landlords will apply for loans in relation to 80% of rents owed by eligible tenants, translating to $1.3 billion in rents to be supported by forgivable loans.
The loans available under the Canada Emergency Commercial Rent Assistance Program are $644 million, or 50% of the total rent owed by tenants of participating landlords. It is assumed that all of these loans will be forgiven, giving a fiscal cost of 100% of the face value of the loans. The federal government bears $483 million of the cost of these loans, approximated as 75% of the value of the loans.
The methodology and data sources used for each of these calculations were outlined in our initial estimate.