Many small business owners in Nashville are struggling to keep up with their rental payments as a result of business slowdowns during the pandemic. If you’re in the same predicament, consult your CPA firm about the actions you can take and explore all options that may be available to you.
In September 2020, the Center for Disease Control issued an order that temporarily halts evictions until December 31, 2020. To enjoy this protection, however, you must meet certain requirements, as outlined here.
One of the declarations you must sign on to states, “I am using my best efforts to make timely partial payments that are as close to the full payment as the individual’s circumstances may permit, taking into account other non discretionary expenses.”
To avoid issues or disputes about this clause with your landlord, it’s highly recommended that you negotiate your lease to cover the effects of the COVID-19 crisis. You and your landlord must be in agreement as to what constitutes “best efforts”, and how much partial payments you can afford to make, if any.
How to Negotiate Your Lease
It’s best to meet with your landlord in person or through a conferencing app instead of just exchanging emails. Before the meeting, review your options, and be prepared with the figures to back up your offer.
These are some of the negotiation points that you can take up:
1. Payment terms
Request for reasonable terms that are beneficial to you and the landlord. These include:
- Rent reduction for a set period
- Postponement of rental payments until a given date or period
- Rent abatement or suspension for an agreed period
- Conversion of late payments into a loan that you can pay back over a given period
- A grace period without penalties
- Apply part of or your entire security deposit as payment for rent
- Request for additional fees, such as parking, maintenance, and administrative fees, to be waived for an agreed period
- Renegotiate a temporary lease term that will be applied for the duration of the crisis
2. A compromise agreement
As in any other negotiation, you’ll have a better chance for a successful outcome if you add “sweeteners” to your offer. Find points for compromise, such as:
- Agreeing to a definite extension period
- Having a guarantor or co-signer
- Offering a percentage of your profit or shares of your business
- Agreeing to an interest fee for late payments
3. Proof of your hardship
Your landlord may be amenable to new lease terms if you can present proof that you’re doing everything you can to meet your rental commitments. One of these is exhausting all available assistance from the government and your community, such as a PPP loan or funding from an SBA program. Profit and loss statements and similar documents may also help convince your landlord about the difficulty you’re going through.
One of the things to keep in mind is that landlords are also not in a good position to lose tenants at this time. With unemployment and business closures on the rise, finding new tenants can prove difficult, resulting in even bigger losses for rental property owners. Given this, it’s highly likely your landlord is open to a compromise, so negotiating your lease can be a step in the right direction.
Sources:
How to Negotiate Rent for Your Small Business During COVID-19, Business.Nextdoor.com
9 Ways to Renegotiate Your Rent to a Lower Price, According to Experts, BusinessInsider.com
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