Tuesday, November 29, 2022
Cash FlowBusiness Rent Options When You Are Closed

Business Rent Options When You Are Closed

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If your business has been closed during the coronavirus shutdown or if you have had minimal income during that time, there are some things you can do to remedy having a lack of rent money. Many business owners are finding themselves in a tight spot because the rent is due and the government-appointed leniency on rent is over.

In some states, the government stated that evictions cannot take place during the mandated coronavirus shutdown. This type of law will vary between states. Most judges are also not trying this sort of case now and it can be expected to be some time before they resume or get to your case.

The Landlord’s Considerations

Landlords may find themselves in the middle of a difficult situation. They also must make payments to their lenders for the loan on the property or properties if they own several. Some government agencies have mandated a freeze on rent payments and evictions. This period may be extended if the current stimulus package now in Congress is passed.

A plus on the retailer’s side is that a landlord may have trouble finding a new business to fill in the space right away – meaning that the landlord may not be better off finding a new renter. This fact can give you some leeway if the landlord will listen to your plea for leniency.

The landlord will also want to know how soon you can pay the back rent if you ask for leniency. Of course, you cannot be certain, but try to work out a deal where you make payments to get caught up within a reasonable time. You may also want to agree to give the landlord a percentage of your monthly proceeds to get caught up. Whatever you can agree on, be sure to put it in writing.

Renegotiate Your Lease

California has a bill in the works that would allow certain types of small businesses to renegotiate a lease if coronavirus regulations forced them to shut down. Leases can also be modified under the new bill. Under the new legislation, landlords will have up to 30 days to complete a new rental agreement or the renter will be able to break the lease. In other states, the landlord may have to approach their lender for approval.

New York City just passed legislation declaring it illegal to harass tenants that cannot pay. The New York City Council spelled out the details of what harassment means, including that tenants cannot be locked out, remove personal property, use force, interfere with the business, and more.

What You Can Do

The first thing you need to do is to communicate with your landlord about your situation. Be kind when you talk to your landlord and carefully explain the situation if they will listen. Avoid being belligerent – it will more likely get you evicted when the opportunity comes.

Secondly, you should make the effort to pay what you can during your shutdown period – if you are still closed or just getting opened again. Avoid not paying anything if you can. Try to set up a payment arrangement ahead of the time the eviction time is canceled so that you are not expected (or demanded) to pay all back rent at once.

Check Business Interruption Insurance

As a business owner, your business may have a business insurance policy with Business Interruption insurance as an option. If you have it, this coverage will pay for certain causes of business interruption. You will have to talk to the insurance company about it to see if your coverage will provide the needed funds under the COVID-19 situation.

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