Can’t Pay Your Office Rent? Here’s 5 Things You Can Do Amid COVID-19

Dec 13, 2021

You are leasing office, retail, or industrial space and due to COVID-19 your business is at a standstill and you have little available cash to pay bills.  Welcome to the new reality that will hit the commercial real estate market hard, starting now.

What decisions can you make now in order to make your next rent payment?

Mayor London Breed has already announced a moratorium on commercial evictions for small and medium-sized businesses related to financial impacts caused by COVID-19. The moratorium “will prevent any small to medium-sized business from being evicted due to a loss of income related to lost revenue or other economic impacts caused by the COVID-19 pandemic.” However, you still have an obligation to pay rent.  So, here are some things to look into.

1.     Business Interruption Insurance

Almost all landlord leases require that the tenant maintain business interruption insurance, sometimes referred to as business income coverage. Business interruption insurance helps replace lost income and pay for extra expenses when a business is affected by a covered peril.

Every policy is different, however some do cover pandemics. I would strongly encourage you review your leasing terms as well as your insurance coverage and see if you qualify.

2.     SBA Disaster Loan Assistance

The government is about to launch a new low interest 30-year loan program for  businesses of all sizes, private non-profit organizations, homeowners, and renters. SBA disaster loans can be used to repair or replace the following items damaged or destroyed in a declared disaster: real estate, personal property, machinery and equipment, and inventory and business assets.

3.     San Francisco Emergency Loan

San Francisco has announced they are working on emergency relief loans for small businesses, although not published as of this writing worth checking. They also offer Homeowner Emergency Loan Program (HELP) for San Francisco homeowners in need of a one-time emergency financial assistance loan due to an “unforeseen financial hardship.”

4.     Talk to Your Landlord

Rather than simply not pay rent, I encourage you to notify your landlord ahead of time. Let them know your situation and include a current bank statement to verify cash, current receivables, profit and loss. In 2009, our firm was successful in working out a deferment of rent that got us through the crisis and we remained a tenant in good standing through to the end of our lease term.  Furthermore, if you are in a position to pay partial rent, that too is worth doing. Still give your landlord advanced notice either with a phone call or written letter with the payment. Again, it’s good idea to also include your financials. You could also ask that any rent not paid get deferred and amortized over your remaining lease term to avoid being at fault.

5.     Talk to Your Lender

If you are the owner of your building and you also own your own business, call your lender right away and follow the same procedure as stated above.

The worst thing you can do is simply not pay. Everyone is aware of the situation. Keeping everyone informed will show responsibility and keep you in good standing with your lender and landlord. Assure them that as soon as everything is stabilized, you will do your best to pay your rent.

Written by: Hans Hansson

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Hans Hansson is President of Starboard Commercial Real Estate. Hans has been an active broker for over 35 years in the San Francisco Bay Area and specializes in office leasing and investments. If you have any questions or comments please email [email protected] or call him at (415) 765-6897. You may also check out his website,