Businesses need rent cash flow and rent relief now. Right now businesses and their owners are fighting for their lives and livelihoods. The battle is real.
With rent being the next biggest expense for businesses after wages, you would think that the government would have heard the calls from business owners for rent relief. In fact, in my opinion the call for rent relief or for any relief seems to have fallen on deaf ears. It seems to me that the government is missing a big piece of the puzzle.
Given that small to medium sized businesses make up nearly 90% of businesses in NZ most do not have the cash reserves or funding ability to fund an extended government imposed lockdown. Over 120,000 self employed people and contractors applied for the wage subsidy. Expecting businesses to survive without a cash injection and financial support is unrealistic. It is vital that businesses survive rather than collapse which leads to me to ask what has the government actually done to support small to medium sized businesses in NZ?
So far what the government has released does NOT help many small to medium sized businesses in NZ. Deferring termination of commercial tenancies and giving tax relief in future does not help fund or pay the rent or expenses or mortgages in the meantime. Nor does granting government backed loans to businesses up to 80% with a 250k turnover plus help as it automatically excludes a lot of businesses and that’s if you can get funding.
https://www.beehive.govt.nz/release/government-backs-business-through-covid-19
While much has been made of the wage subsidy as “helping” businesses, let me be clear this does not help business owners pay rent or expenses with rent being the number one overhead and concern for business owners after staff and wages. All it does is put staff on hold. While this helps pay people in the meantime, it does not stave off the reality that businesses will have to look at cutting staff or employees to save their business. Something which no business owner or employer ever wants to do leading to unnecessary unemployment.
Then there is the government backed loan scheme purporting to offer a total of $6.25 billion in loans. The reality is that the government backed loan scheme is not going to help any businesses at all right now (or in the foreseeable future) because there is no process in place between the banks and the govt on what loans or the terms are that will be backed and lending terms are so tight you can hardly even get any funding anyway. In fact, in my opinion, there is in fact no relief for small to medium sized businesses at all right now and I am wondering why the government is leaving them out in the cold. NZ cannot afford approximately 120,000 self employed and contractors who applied for the wage subsidy to fail and 20,000 plus businesses to fail. After all, it is the businesses who pay rent, taxes, GST, employees wages, kiwisaver and ACC levies.
To say there is relief or funding available when there clearly isn’t does not help businesses, their owners or landlords and tenants when in fact no one can actually access the supposed loans or funding.
Then there is the tax relief scheme. This again fails to help businesses continue to operate right now. While that may help in future one might have to flip a coin right now to guess when that will be.
This leads me to the conclusion that banks are now the last bastion of hope and here’s hoping they help.
If you require independent legal advice on your situation, negotiation or representation in relation to rent, funding or mortgage issues for you and your business please contact kate@katesheehan.co.nz. We do a 30 minute free no obligation consultation and if we can’t help you we’ll point you in the direction of someone who can.
Disclaimer- Any and all opinions are my own and I welcome any comments or feedback.