How small businesses can navigate commercial lease renegotiation

How small businesses can navigate commercial lease renegotiation

If your small business has been suffering since COVID, you’re not alone. According to a recent survey by the U.S. Census Bureau, more than 50 percent of small businesses nationwide have been negatively impacted by the pandemic. Businesses that depend on physical locations are even harder hit. More than 80 percent of those in the food and hospitality sector have been impacted.

What can these businesses do to stay afloat? One option (among others) is to pursue a lease modification. The existing commercial lease may no longer be financially feasible for your business.

Here are some tips to consider:

1. Have a plan

Before approaching your landlord, take a deep dive into your finances so you understand, realistically, what it will take to stay afloat – whether it’s a rent reduction, repayment plan or other more favorable terms. There’s no use negotiating a lease modification if the numbers still don’t make sense. Develop a proposal that will work for your business (and, hopefully, for the landlord as well).

2. Know your leverage

Small businesses in Connecticut and New York are temporarily protected from commercial evictions for nonpayment of rent. However, certain requirements apply. If you follow those requirements, you will have stronger leverage for negotiating better terms on your current lease, since your landlord won’t be able to take enforcement action.

3. Get legal help

Navigating a lease modification on your own can be challenging. Consider enlisting a small business attorney for guidance. An attorney can ensure that key issues don’t get overlooked. They can negotiate on your behalf, maximizing your chances of a successful outcome.