With the pandemic showing no signs of slowing down, small businesses across the Northeast are gearing up for the double whammy of COVID and influenza season. Although measures such as PPP (Paycheck Protection Program) and Economic Injury Disaster Loans (EIDL) have helped many businesses stay afloat temporarily, that funding is running out. And businesses like restaurants – which have survived the summer by offering outdoor dining – face a tough road ahead once cooler weather hits.
Whether your business has been forced to shut down for periods of quarantine or the revenue simply isn’t coming in, you may be scrambling to make rent. It may be time to consider negotiating a lease modification.
Depending on your financial situation, more favorable lease terms could include:
- Rent reduction: Ask for a rent amount that’s more in line with current market values (given the downturned economy). Or negotiate for a percentage of your sales as rent payment instead of a base rate.
- Rent abatement: If your business is already behind on rent payments, your landlord may be willing to forgive some or all of that amount, provided you stay current on payments (ideally, at a reduced rate) going forward.
- Payment plan: If your landlord doesn’t go for abatement, consider pursuing a payment plan that allows you to catch up on past-due rents over a reasonable period.
- Subletting: Consider sharing your space with another tenant and sharing the burden of rent. With fewer customers, you might no longer need all that space anyway.
And remember: During these uncertain times, landlords have a financial motivation to be accommodating. They have their own financial obligations to meet. Evictions take time and money. Even if they’re successful in booting out your business, the commercial lease market isn’t exactly hot right now. They may be better off working out an alternative arrangement with an existing tenant rather than risking a lengthy vacancy. Talk to a lawyer about how best to negotiate a lease modification (and how to ensure that the resulting agreement is watertight).