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Tips for Small Business and Consumers Facing the Rent Crisis During COVID-19
With the COVID-19 pandemic causing shutdowns throughout the country, the U.S. is facing a rent crisis. In May 2020, nearly half of commercial retail rents went unpaid, and 7.5 million businesses are at risk of closing their doors permanently.
In terms of consumers, 31% of the 13.4 million renters in the U.S. did not pay their rent at the beginning of April. By May 6, about 20% of renters had not yet paid their monthly rent. Many people may not be able to afford such expenses due to a job loss.
If you need crisis help with rent right now, you have many options. By being transparent with your landlord about issues you're facing and working out some sort of deal, you may be able to stay afloat during these tumultuous times.
Here are some tips to help you weather the storm.
Read Your Lease
If you're a business owner facing a rent crisis, carefully read your lease, says Andrew Latham, managing editor of SuperMoney.
"Don't get your hopes up, but some contracts include a clause that suspends rent obligations if the government forces you to close your business or there is a catastrophic emergency," he says.
Talk With Your Landlord
It would be best if you did not ignore your landlord because you're dealing with the rent crisis. Instead, be open about your issues.
"Keeping transparent and honest communication with your landlord will improve your chances of negotiating a successful resolution," Latham says.
Negotiate Rent
Whether you're renting your home or commercial space, don't just stop paying rent altogether. According to realtor and independent contractor Franklin Mendez, if you do that, your landlord could evict you or pursue legal action.
Instead, speak with your landlord about working out a payment plan or getting a discount on rent. If you're a business owner with assets like equipment or appliances, you could pledge that instead of actual rent, says John Howard, CEO at Coupon Lawn.
When figuring out how to negotiate the rent with a landlord, Howard says you should be kind and friendly, remind them how long you've been a loyal tenant, and say that you still want to do business with them.
"Offer to sign a formal contract stating the facts you have negotiated or suggest a violation fee if you will not be able to pay the bill on the agreed date and time," Howard says.
Be sure to talk to your landlord when negotiating as opposed to their administrative staff. "Negotiate directly with your landlord whenever possible, but keep a written record of any agreement you make," Latham says.
Apply for Government Relief
The government has stepped in to help with the rent crisis, offering the Paycheck Protection Program, the Economic Injury Disaster Loan Emergency Advance, and Pandemic Unemployment Assistance (check your state website).
"A lot of this is free money as the government continues to approve trillions of dollars in funding for businesses," Mendez says.
Additionally, local governments are protecting renters from eviction during the rent crisis. For example, in Los Angeles, landlords cannot evict renters who can't pay because of COVID-19, and tenants have 12 months after the local emergency period expired on May 15 to pay back their rent.
Getting Back on Your Feet
As cities reopen and the economy makes a comeback, the national rent crisis will begin to improve. For now, you can rest assured that help is out there if you need it, and you can use this as a lesson for the future.
"We should all learn from this financial crisis," Howard says. "Nothing is permanent, and the world keeps on changing. We should all consider plans for the worst-case scenarios and save money for emergency funds."
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