Rent pits small businesses against landlords in battle with no winners

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Small businesses ranging from restaurants and bars to gyms and music venues are behind on rent and falling further into debt as restrictions remain in place limiting the number of customers they’re able to serve. Owners are increasingly turning to their landlord for any kind of financial relief, either postponing payments or renegotiating the price. 

A quarter of businesses surveyed by small business networking site Alignable reported not paying their full rent since the shutdowns began in March, and just 8% were able to negotiate a new rental contract with their landlord. As establishments remain closed or only operate at limited capacity, their ability to catch up on the payments substantially diminishes.

For their part, many landlords are small business owners themselves with mortgages and taxes they are obligated to pay. Reducing the rent or accepting partial payments may not be an option. The alternative, though, is trying to find a new tenant in an economy where thousands of businesses are going under—a scenario that will have far reaching consequences on the local communities. 

How is your business coping with rental payments? Have you tried to renegotiate your lease and what was the conversation like, if so? If you haven’t, what has helped you get by in the interim?

Latest Developments

• The forced closures due to the pandemic could result in $14.2 trillion of economic losses in the United States over the next 80 years, according to a new report from the OECD.
• The economic downturn is also forcing states to raise taxes and cut unemployment benefits, the costs of which are likely to be passed onto small businesses in the form of higher payroll taxes.
• College towns, in particular, are seeing a sharp downturn as campuses shut down because of coronavirus outbreaks and sporting events are called off. 
• Restaurants continue to be battered, with more than half of Texas eateries at risk of permanently closing within the next six months if they don’t receive aid.
• One area in the restaurant industry is booming as the delivery market continues to strengthen: ghost kitchens.
• California is extending further relief to its small business workers by expanding family leave protection. Those working at firms with fewer than five employees are now eligible for up to 12 weeks of unpaid leave to care for a sick relative. 
• Big box retailers could face lawsuits over unused gift cards that are worth millions as brands file for bankruptcy. 

Conversations For You

• The pandemic has devastated small businesses, but the smallest of micro firms are feeling more optimistic about the future, according to LinkedIn’s latest Workforce Confidence Index. Sole proprietors have found new opportunities in the market and are talking about how they’ve made this moment work for them. 
• Prospective homeowners are flooding the market, snatching up properties and making bids sight unseen. Builders are struggling to keep up with the demand and find skilled workers to join their teams. Owners of smaller firms are sharing what the future may hold for their industry and how they’re finding talent. 

Resources

• Businesses in Vancouver, Wash. have until Sept. 25 at midnight PT to apply for the city’s grant program. 
• Yolo County in California has set aside $750,000 to give out in the form of grants to small businesses in its cities, including Davis, Sacramento and Woodland. 
• Celebrities are donating to small businesses through the Hello Alice network. Firms can apply for grants of up to $50,000. 
• Texas’ Collin County will continue to accept applications for its grant program through Sept. 25. Businesses can apply for grants ranging from $5,000 to $25,000.

Something Good

• This Ecuadorian couple has been together for 79 years and is now the world’s oldest married couple.