As New York City businesses are forced to close or reduce their hours, many commercial tenants are struggling to pay their rent. For the most part, commercial rent payments are the largest source of income for landlords. But with stay-at-home orders and the coronavirus pandemic forcing people to hunker down, cash flow for most commercial businesses is drying up. This decline in business means commercial tenants are not getting the funds they need to pay their rents, which may lead to late fees or even eviction.
This situation is especially challenging for restaurants and bars. These businesses rely on foot traffic to bring in revenue, and with the coronavirus pandemic leading to most people staying at home, restaurant and bar patrons are not coming through the door. This has made it difficult for restaurants and bars to bring in enough money to cover their lease payments.
In an attempt to keep their doors open, many commercial tenants are requesting extensions of their lease terms or have been asking for rent reductions or waivers. This is not an unusual request, and most landlords are willing to work with their tenants to find a mutually beneficial solution during the current pandemic crisis.
The best way to negotiate with a landlord is to talk about the situation early and often. Good landlords want their tenants to succeed, and most will be happy to come up struggling to pay bounce back loan with a mutually acceptable solution that is in the best interest of everyone.
One option is to contact a lawyer for help deciphering the lease and strategizing about how to negotiate with the landlord or figuring out what assistance programs a tenant might be eligible for. Small business clinics at many law schools and non-profit organizations like the Microenterprise Project and Lawyers for Civil Rights have projects that match small businesses with attorneys who will work pro bono.
Another option is to consider a payment plan. If the landlord is able to work out an agreement with the tenant, this can save both parties a lot of stress and time in the long run.
Tenants should also review their lease to see if there is a provision for assigning or subletting the lease. If there is, and it is permitted under the lease terms, this can be an excellent solution if the tenant is unable to afford their monthly lease payment due to financial difficulties.
Other options include putting the business up for sale or liquidating the assets, but this is more risky and should be discussed with a lawyer before proceeding. If the above solutions are not available, a commercial tenant should consider moving to a different location. This will not only solve the immediate problem of paying the rent but can also make the transition easier when the pandemic is over and the business can get back to its normal operations.