Small business owners in North Carolina and South Carolina are being forced to make some hard choices. Do I pay rent for my commercial space, or do I pay my employees? What if I can’t do either? What if I can only do one?
Some businesses have been able to adapt and get creative to make it through these hard times, but may not be operating at 100%. Other businesses are facing severe hardships through no fault of their own and have already closed their doors or are hanging on by a thread. If you fall into one of these categories, there is help available to you.
The CARES Act was recently passed by Congress. Although the details are still being worked out, the purpose is to give small business owners immediate help to survive the COVID-19 pandemic. There are a few options to help you pay your rent and pay your employees. For the most up to date information please visit https://www.sbc.senate.gov/public/index.cfm/guide-to-the-cares-act
Paycheck Protection Program (PPP) allows small businesses to keep workers on payroll during the pandemic. You can also use the money to pay rent, mortgage interest, and utilities.
Has the potential of the all or most of the loan to be forgiven (businesses that pay all employees for 8 weeks will not have to repay loans used for payroll, rent, mortgage interest, utilities)
Only for small businesses with less than 500 employees
It covers sole proprietors, independent contractors, self-employed individuals, private non-profits, veteran’s organizations
Economic Injury Disaster Loan Emergency Advance (EIDL) is a loan that canprovide up to $2 million dollars at 3.75% interest for a 30-year term. Most non-profits will have a 2.75% interest rate. While the payments are deferred for 12 months, the interest does accrue.
Advances up to $10,000 within 3 days of successful application – does not need to be repaid
No personal guarantee for loans under $200,000
Collateral required for loans over $25,000
Sole proprietors, independent contractors, co-op, or tribal small businesses are eligible
There are some exclusions on how you can use the money (dividends, bonuses, expansion/acquisition of real estate, refinancing debt)
Apply for the loan here: https://covid19relief.sba.gov/#/
In addition, you can apply and use both PPP and EIDL as long as the funds are used for different purposes. Please consult https://www.sba.gov/funding-programs/loans/coronavirus-relief-options for the most current information.
SBA Express Bridge Loans is for small businesses who have an existing relationship with an SBA Express Lender.
Access up to $25,000
Repaid in full or part by an EIDL loan
As you can see, there are many options available to you that are designed to give your business the lifeboat it may need. You will be able to pay your employees, pay your monthly rent or mortgage, and basically keep the lights on until your business can reopen.
Disclaimer: The logistics are still being worked out and the rules and regulations are very fluid at the time this article was posted. You will find the most up to date information on sbc.senate.gov. Please consult with an SBA preferred lender, your bank, or your accountant for their professional recommendations.
Brian Smith, CCIM, MBA, is the founder of Regent Commercial Real Estate, located in Mecklenburg County, North Carolina. He specializes in tenant and landlord representation in North Carolina and South Carolina. He is an expert in his field and welcomes the opportunity to answer any questions you may have during this confusing and uncertain time.
By Guizmo|2020-04-10T15:38:32-05:00April 10th, 2020|Categories: Blog|Comments Off on How the CARES Act can help you pay rent on your commercial space
We are experiencing unprecedented events that leave most of use worried and confused. Most business owners are being forced to make hard decisions, like laying off staff or temporarily closing their doors. If you rent commercial space, you may be wondering what your options are if your business is facing hardship during the coronavirus pandemic.
You should start by reading your lease to see if you have any options for reduced rent. It’s probably not likely, but you need to know your options.
Talk to your landlord. If you have a real estate broker, have them speak to your landlord on your behalf. It doesn’t hurt to plead your case. This is an emotionally charged time for everyone and it might make more sense to have a neutral party that isn’t emotionally invested. Landlords are also making difficult choices so keep the conversation civil if you are talking to them directly.
While you may be concerned about your immediate need for rent relief, most landlords are in this for the long haul and will be looking at the big picture. Which means they might be willing to work with you. However, your landlord’s situation will have a direct impact on how much they are willing to help―or not help you.
Even if your business is operating as usual during the COVID-19 pandemic, you should contact your landlord. They may be willing to offer you some concessions, especially if you are getting near the end of your lease term or are coming up on a renewal option. You are also in a very strong position if you need expansion space.
No one has been though something of this magnitude before and we are learning as we go, butgetting some advice from a trusted commercial real estate professional may help ease your mind a bit during this uncertain time.
Brian Smith, CCIM, is the founder of Regent Commercial Real Estate based in Charlotte, North Carolina (Mecklenburg County). He specializes in tenant and landlord representation in North and South Carolina. Please don’t hesitate to contact him with any specific questions you may have. 704.910.9518 or firstname.lastname@example.org
Subleasing a space sounds like a great deal, right? Find a furnished space and move-in. Although subleasing a space sounds simple and straightforward, it is not. There are many factors to consider when entering into a sublease. A sublease will contain more paperwork than a standard lease. It will include the sublease, the original lease and addendums, and the landlord’s consentdocument.
You need to be cautious, and having a qualified a commercial real estate broker at your side will immediately give you an advantage. Your sublease is contingent on the sublessor’s original lease and it needs to be thoroughly reviewed by a professional. They have the experience to understand the documents needed for a sublease transaction and can walk you through the process.
There are many reasons a company chooses to sublease their space. They may have downsized and are trying to cut costs by subleasing the space they no longer need, or they could be outgrowing their space and the landlord is not able to accommodate them in their current space. If there is enough term left it would make sense for them to sublease rather than pay earlier termination fees. Either way, you will probably get a below market deal.
• Lower rate – sublessors are motivated to get some cash flow
• Shorter term
• Less commitment
• Most subleases are move-in ready and might contain furniture
• Smaller spaces (which is ideal for start-ups or smaller firms who want to control their costs)
• If the sublessor is still on-site and you are just leasing a portion of their space you may be able to negotiate shared services (copier, break room, conference rooms)
• Monthly costs tend to be a flat fee that covers rent and CAM charges (no unexpected expenses)
• You will be limited by zoning restrictions for the area
• Limited or no exterior signage
• You probably won’t be able to alter the space
• Bad lease deal can be passed onto you. A thorough review of the original lease and the sublease by an attorney can help avoid this.
• If sublessor defaults and gets evicted, you may get evicted too. Or the landlord could ask you to pay the full rate the sublessor was paying.
• Delays in maintenance. You may not be able to go directly to the landlord-you might have to go through the sublessor. And this could cause delays.
Deciding whether or not to sublease is a big decision and there are many factors to consider. We can help you navigate through unfamiliar territory. Contact us today and we can help you get started.
By Guizmo|2020-03-18T11:16:30-05:00March 28th, 2020|Categories: Blog|Comments Off on Does it Make Sense to Move Into a Sublease Space?
When you rent office space, your monthly rent and all expenses are determined on a per square foot basis. Since this is the determining factor for all your expenses, it is important to make sure you have the right amount of space for your needs. While cost is important, you should also take into consideration how the space layout will affect your employee’s productivity and job satisfaction.
Your first step is to assess your current situation and have a general idea of your future needs. Here are a few questions you should ask yourself:
How many employees do you currently have?
Do you plan on hiring or downsizing in the next five years?
Does your current office layout work for you? Create a pro and con list
If you do not currently have office space, what would your ideal space look like?
Square footage needs per person will vary greatly depending on your industry and personal preferences, but a safe average is 175 square feet per person. For example, if you have 25 employees, you will probably need an office around 4,375 square feet. While that might not be your final number it will give you a general idea of what you will need. Keep in mind that it could be as low as 150 square feet per person or as high as 330 square feet person. It all comes down to the type of layout you will need.
You will also need to determine the type of space that will work the best for you and your employees. Your company will have its own unique requirements so there is no one fits all approach. While cost is a deciding factor, it shouldn’t be the only criteria. Having an open dialogue with your employees on their wants and needs can be very helpful at this stage. Here is a look at the most common layouts.
This type of space will have minimal (if any) private office and conference rooms. This allows for flexibility and collaboration, but you sacrifice privacy. This type of layout typically requires less square footage, making this a more affordable option. This space is ideal for start-ups and call centers.
Private Office Layout
This dense plan consists of private offices and conference rooms. Each employee will have their own space and will be closed off from their coworkers, however this works if confidentiality and client meetings are a priority. This type of layout will be more expensive due to the larger square footage required. Law offices and mental health practices can work well with this layout.
The 2019 Gensler U.S. Workplace Survey states that 77% of employees prefer an office space that takes elements from both the open and private layouts. By choosing the combination layout, you are able to offer an adequate level of collaboration and privacy to your employees. Now it’s time to enlist the help of a commercial real estate broker to help you find your ideal space. Once you have found the perfect space it is time to bring in a space planner. A space planner can help you determine the most efficient layout for your needs. Regent Commercial Real Estate specializes in tenant representation. They are experienced and dedicated. Contact them today.
By Guizmo|2020-03-12T15:33:11-05:00March 12th, 2020|Categories: Blog|Comments Off on How Much Office Space Do You Really Need?
Commercial property is considered anything that is used for business. It can include office buildings, warehouses, retail malls, manufacturing facilities, hotels and large residential properties. When you invest in commercial property you make money through rental income and appreciation in the property’s value over time. Investing in commercial real estate can be profitable, but can also come with significant risks. Buildings don’t always hold value and tenants don’t always renew. You think you are ready, but where do you start?
Step One: Know Your Why
Take some time to determine what your goals are for purchasing commercial real estate. Some examples would be:
Do you want to invest in a property that you will also occupy or are you interested in purchasing a property to diversify your portfolio?
Do you want to buy a property that is 100% leased and doesn’t need any immediate improvements or do you want to purchase a vacant property that needs significant improvements at a lower price (value add property)?
Step Two: Get Educated
Buying commercial property is complicated and it takes research, planning, and time. Eventually you will need to call in the experts, but it never hurts to have a simple understanding of the process. This is not like investing in stock. Commercial properties will require your time and attention to stay on top of any issues. You need to be an involved participant for your investment to succeed. For example, real estate markets are cyclical so you need to determine where the market currently stands and when it is expected to change. Getting in at the right time is essential.
Step Three: Assemble an Expert Team
You know the old saying “you don’t know what you don’t know?” This is especially true when you decide to invest in commercial real estate. You need to surround yourself with specialists who have been there, done that and can guide you through this new venture. These specialists should include:
Commercial real estate broker to help you analyze the market and find potential opportunities that meets your goals
Mortgage broker to help with your financing needs
Lawyer to review all documents associated with the transaction
Accountant to advise you on tax related issues and to run the numbers before you buy. They should also forecast your future returns.
Step Four: Find the Right Property
This is where a commercial real estate broker is essential. Their market expertise is invaluable as you search for your first property. If you have been thinking about purchasing commercial property, give us a call. We would welcome the opportunity to discuss your needs and determine if the time is right to start investing in commercial real estate.
Brian Smith, CCIM, can answer any questions you have about investing in commercial real estate. Contact him today for a complimentary consultation.