HomeLatest ThreadsGreatest ThreadsForums & GroupsMy SubscriptionsMy Posts
DU Home » Latest Threads » kpete » Journal
Page: « Prev 1 2 3 4 5 6 7 ... 28 Next »


Profile Information

Member since: Fri Sep 17, 2004, 03:59 PM
Number of posts: 67,631

Journal Archives

Pelosi says the House is looking at coming back in mid-May. Says the next big bill "will be CARES 2


A friend asked me to share: Trickle up economics, a way out, and small businesses during Covid

Trickle up economics, a way out, and small businesses during Covid

While we continuously debate stay-at-home orders, virility, treatments and mortality rates, there is very little talk of a looming crisis that most small businesses and sole proprietors are already delving into knee-deep: what should happen to our business leases?

In parts of California (where we run a small jiu-jitsu martial arts gym), the response has been to freeze evictions for a couple of months; but as the Governor and others have announced, to still be on the hook to repay these months as back rent under our leasing agreements. In many situations, once these businesses are allowed to reopen they will be faced with not only their standard rent, but additional rent to pay for this time while being closed. That this will happen in a downed economy, with Covid limitations on capacity and fears from former clients to return to these businesses, is absolutely catastrophic to small businesses.

Before I go further, let me say this: the situation is awful for everyone. It is awful for us, the property owners, and the lenders. However, I do believe that more property owners and lenders are in a situation to survive this situation with existing capital than most small mom and pop businesses. Before I get into my solutions, let me share my personal situation.

In March 2020, we were closed due to the high risk nature of jiu-jitsu (essentially wrestling). At this point we contacted our business park and received no dialogue until yesterday, April 28, 2020. In the meantime we decided to forego our monthly rent, because with limited savings and a moratorium on evictions we knew we had to ensure that our savings went toward our family’s immediate needs: shelter, food, electricity, and health insurance. Yesterday, we received the “deal” that many small businesses are getting in many different forms with mostly the same elements, “Hey, we understand your situation, but we’ve got bills too, so you’re obligated under your lease to pay and we’re willing to offer you 50% off rent for x amount of months, and when this is over you can pay the other 50% of those months to period y to be paid off by this looming date.”

What does this mean for guys like us, who are higher risk with likely phase 4 openings? For an indefinite amount of time we will have to pay rent on an empty facility that empties our personal savings that really doesn’t get recouped. When and if we return, we will have nearly zero dollars or massive debt, and we will then begin repayment of our regular leases plus whatever was worked out for the time closed. This of course, is in addition to the ballooning repayments of loans that were also used to either survive or pay off business park rents. The result? Well there’s many, but some of the most dire are: bankruptcy prior to re-opening, defaulting on a lease and legal action by the lessor (i.e. bankruptcy again which may happen at any point during the default), and eking out a base line living to ensure the business park retains 100% of their profits.

So what happened to us when we asked for an abatement or an extension of our lease? The liaison to the landlord (they’re a large conglomerate) said, “what, you want something for free?!” Funny how this works, but asking a tenant to pay something for nothing (while receiving zero income) is not asking for a handout (the landlord), but asking to pay for usage (the tenant) is.

With this in mind, let’s talk a couple of solutions. First solution is something that is receiving crickets in American government but was done almost immediately in Italy. Freeze the debt. Who wins here? Obviously, the small guys (me) and the middle-ish much bigger guys (property owners). Both don’t have to worry about their lease debt and it allows everyone to return to business without worry. Who loses? Banks and lendors. Big time. So with things looking to favor banks currently (like these massive loans and a reported 10 billion dollar windfall), I don’t see this as likely, but would definitely help keep this machine running. In this case the trickle is upward, and after a rough patch hopefully the businesses would later be able to balloon the banks from this position.

Option 2 is for cities and states to allow small businesses to exit their leases if they have suffered prolonged and provable shutdowns. Who wins here? Potentially both sides. For example, a small business gets to avoid bankruptcy, while the lessor does not have to wait months on end for an eviction moratorium to pass to either litigate some form of collections that may never come (these courts are going to be overwhelmed with their own surge) and can immediately look to fill their vacancies with a lower risk-of-closure tenant. There would be potentially more vacancies for other small businesses as a swapping effect could potentially happen.

So for my diverse group of friends, let me share how your views might fit in here. For my progressive/liberal friends: protecting the little guys will elevate our economy from where it has always mattered - the small businesses and let’s face it - mom and pop taco stands are always way better! We do need real help at this point, and we’re people that pay our bills on time, everytime, but just don’t have the existing capital to keep our small businesses flourishing in this emergency.

For my conservative friends: Allowing a default on a lease sounds terrifying to the guys at the top, but this is Free Market Capitalism at its best! The business parks will have to make a fair deal or just as fair, they can compete for new clients to fill their vacancies! They get to avoid costly litigation for unpaid remainders and can change their mindset from milking their tenants for what they can to finding the optimal tenant in a new economy.

So with this in mind, please share your thoughts on what to do about the small business crisis! Just an FYI, we applied for every grant and every loan and so far we’ve been denied everywhere. We live our lives debt free and on-time and for the first time, it looks like we may have to seek crazy debt to ensure our family’s survival just to ensure the business park gets theirs. One last thing, I’ve never been the type to ask for a handout, but keep in mind how frustrating it is to see private banks making $10 billion profit on what should be zero percent government loans, and questionable $10,000,000.00 “small business” loans given to giant corporations, when in my case 25,000 to 40,000.00 in forgiveable loans would have prevented both my small business and my lessor from being in this mess in a potential 4-6 month closure. In the end, I just want to be able to earn my income honestly and return my business to once again being a profitable small-America success story.

If you’re looking at a phase 3 or 4 re-opening please share your situation and PLEASE SHARE THIS with your friends and the powers that work for US so OUR SMALL BUSINESSES CAN BE HEARD!


Donald Trump does not want to be in charge of any of this.


The first 100 days of Donald Trump's coronavirus response


The first 100 days of Donald Trump's coronavirus response was filled with self-praise, blaming others, magical thinking, downplaying risks, and…golf.

We made a very detailed timeline: https://bit.ly/35hQS0R


Their plan is simple: Starve us out.

It's not just how many tests, but WHEN they were done.


Romney hits Trump's coronavirus response:

"The speed of our response looked slow compared to other people. That first phase will not stand out as a great moment in American leadership."

"We didn't look real strong and that's kind of an understatement."


There's always make believe

S C I E N C E ! ! !

Technically lava can kill coronavirus, but there's a good reason why no-one is using it in the fight against the ongoing pandemic: nothing else would survive the encounter with molten rock either.


Peak Oil?

Red dots represent fully loaded oil tanker ships "stranded" at sea due to no global demand for oil - approx cost per day per ship is $30,000/-.

Go to Page: « Prev 1 2 3 4 5 6 7 ... 28 Next »