Friday, January 1, 2021

COVID-19 has had devastating effects on our economy, our businesses, and our country. For many business owners, what help they have struggled to receive has not been enough, or often has come too late. For example, if a family owned restaurant has suffered temporary closure or a reduction in business (and therefore, profit), finding financial assistance in the form of a grant may cover past due expenses or payroll will not prevent the same situation from occurring in the future, particularly when 90% of similar businesses are reporting an average 36% reduction in revenue coupled with an estimated 38% increase in operating costs (Yelp, 2020). For businesses relying on dine-in and foot traffic, those numbers are even more grim.

Small business owners may choose to take out a loan to cover expenses temporarily, but they are only driving their business, themselves, and their families further into debt. They may consider or even file for bankruptcy. Business owners operating under an LLC (Limited Liability Corporation) may choose to walk away completely, taking whatever funds and assets they can recover in hopes of rebuilding from scratch or simply finding a more secure, less stressful source of income.

Business owners who have fallen behind on obligations such as rent, utilities, taxes and vendor invoices are up against an even bigger concern: Eviction. Regulations for commercial tenants and landlords are constantly changing, and may vary according to each business’s gross annual revenue for current or previous year(s). Local Urgency Ordinances require small businesses to make at least partial monthly rent payments, and ultimately, they will be responsible to pay all outstanding rent payments in full no later than 180 days after the Urgency Ordinance expires or be faced with a formal eviction, toting further time and expense. According to most local laws (outside of the COVID-19 exceptions), a commercial landlord has the right to lock out a tenant who is even just one day late on even just a portion of their rental obligation (or the end of any expressly written grace period in the lease agreement), barring the business owner from not only entering the premises, but may also prevent the owner from ever retrieving anything that was left behind on the property. After a costly (and lengthy) battle in eviction court during which there is no operable business and therefore no incoming revenue to possibly remedy the past due rent payments, the property owner may very well then fight to become the new owner of all of the contents within.

A study conducted by Yelp found that in 2020, between 800 and 1,500 businesses closed every day. The numbers are staggering, and have been and will continue to increase in the near future. Small business owners today not only deal with the stress of day-to-day operations, trying to adhere to strict regulations while providing an experience that will outshine any of the competition because let’s face it, consumers these days have a plethora of options available, right at their fingertips, delivered right to their door. These owners also have the enormous responsibility of providing for not only their own families, but the families of those staff members that may or may not choose to take the risk of continuing to show up to work everyday (or possibly getting paid even more just by staying at home).

Russell Cross says that the pandemic has actually caused a dramatic increase in his business. Cross, CEO of Auction Factory, an online business liquidation site with multiple locations throughout the United States, has assisted thousands of small business owners, franchisees, corporations and even commercial loan institutions in recovering the maximum amount of liquid capital for the tangible assets of their closing or restructured businesses. “What we’re finding now is that since these larger corporations are also seeing a decline in business, they are becoming even more aggressive in their fight to keep what little business is out there. They’ve become stronger in their advertising, and are more apt to offer convenient, less expensive alternatives to appeal to the consumer, who is becoming more aware of their spending habits. I’m not paying $60 to have my family go out and eat a meal while sitting 6 feet apart wearing masks when I can pay $20 to have that meal delivered to my door. It just doesn’t make sense.”

“Many of our clients are small business owners, but we are seeing a lot more business from commercial lenders,” says Cross. “These small businesses still have [operating] expenses. They have equipment needs, they have compliance needs – depending on the size and type of business, between redesigning [dine-in, take-out, carryout stations), additional staff and management training, barriers between diners, reducing the number of seating available – it can cost upwards of tens of thousands of dollars to become COVID-compliant. And all of these requirements must be met before the business can reopen and begin generating the income to cover these costs. It’s nearly impossible to catch up and even harder to get ahead once you get so far behind.”

Cross adds that the amount of commercial repossessions they have seen has also more than doubled. “Most of these business owners have purchased their furniture, fixtures and equipment through the use of a commercial loan. Some have walked out, some have defaulted on their loan payments, some have been locked out of their business and it’s the landlord calling us. They don’t know how else to liquidate, they don’t have anywhere to take the stuff. They don’t want to pay for a storage unit for 6 months, deal with dozens of “buyers” who may or may not really be serious, and eventually, just end up losing it, donating it, giving it away. We have a good relationship with some of the biggest lenders in the business because we move fast, we do great work, and we get them very good money. Many times they can recoup the entire amount owed – and the entire process is hands-off and done in less than 30 days.”

Cross says the hardest calls he gets are from the owners that waited too long. “They call me crying, the landlord’s threatening to lock them out and they can’t get everything packed up and disconnected and moved out in time. They’ve spent years, sometimes a lifetime, growing this business and it’s definitely an emotional time. We’ve called landlords and made arrangements, we can usually get everything out within 24 hours but sometimes, they just can’t take the emotion out and make the right choice before it’s too late.”

Russell Cross can be reached directly by phone at 888-570-1153.

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