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Houston small businesses and landlords grapple with rent relief options during COVID-19 crisis

Houston small businesses are struggling to pay their rent with doors closed and operations ceased — but where should the relief come from? Getty Images

It's not too huge of an assumption to make that many Houston startups and small businesses failed to pay their rents in full yesterday. Since the city's stay-at-home mandate on March 24 — and even preceding that — most businesses have seen a slowdown of revenue as a result of COVID-19-caused business disruptions.

Business owners are frantically looking in their leases and searching online to see what rights they have and what sort of protection they have in such an unprecedented time.

"People are confused. They don't know what to do, and finding information is hard," says Meredith Wheeler, co-founder and chief creative officer of Sesh Coworking, which opened earlier this year.

Wheeler and Sesh's co-founder, Maggie Segrich, have created a petition to get on the radar of local elected officials to challenge them to pass legislation to protect small businesses in this time.

"At the end of the day, it would be so wonderful and idealistic to say that we could rely on the niceties and the moral compasses of our landlords, but it's probably not true for everyone and so that's why we need legislation to dictate what is right," Wheeler says.

But landlords are also in unchartered territory, says Josh Feinberg, who has worked in Houston as a commercial real estate broker and co-founded CRE tech platform, Tenavox.

"There's this idea that there's this acrimony between tenant and landlord, and I think, as a former broker, we're set up that way to get our side the best deal. But in reality, that's just not true," Feinberg says. "The majority of commercial real estate is owned by regular people — not usually some faceless, gigantic corporation."

And they have a piper to pay too, Feinberg adds. Ninety percent of CRE is owned by debt, he says. If the government steps in anywhere, it should be on the lender level, as well as creating some sort of tax relief.

"If there's any relief here, it's going to have to come from lenders, and I think you'd hear that from owners and brokers," Feinberg says.

In somewhat convenient timing, Tenavox has recently co-founded a new company that provides a bit of a solution for small businesses. Otso provides landlords with an alternative to cash security deposits. Traditionally, deposits are held onto by landlords — they aren't legally allowed to spend it unless the tenant defaults.

"In general, I think cash deposits are wasteful," Feinberg says. "It's critical capital that the business can hire with, invest, and use."

Tenavox teamed up with Euler Hermes, a 135-year-old credit insurance company, to create Otso, and the credit company backs the lease performance of each tenant that is approved by Otso. The transaction calls for a fee added to the rent, but no large cash deposit would be required.

The tool can be used on new leases, and, in light of the current situation, Otso can also be used to create an addendum in existing leases so that the tenant can get back their deposit and use it in this time of crisis. Either landlord or tenant can apply online and hear back that same day — Feinberg says he's focused on a speedy response to help get this deposit money back to the tenant.

"If we can get some liquidity back into the hands of the business, they have some a better chance of survival," Feinberg says.

Other than looking into Otso, Feinberg has some other recommendations for small business owners. He says they should be applying for relief from the Small Business Administration, which has more money to dole out than they have ever had. And, as it pertains to working with their landlords, communication is key. Show financials and specific information — like what March 2019 looks like compared to 2020 — so that landlords can take that to their lenders.

"An unprecedented crisis is going to require unprecedented solutions," Feinberg says.

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Building Houston

 
 

We could all use a little IT help right now. Photo by Maskot/Getty

Though it's been around since 2012, JPMorgan Chase's Force for Good program feels especially vital right now. The project connects Chase employee volunteers with hundreds of nonprofits around the world to build sustainable tech solutions that help advance their missions.

Even better, Houston and Dallas nonprofits have a leg up in the selection process. Organizations located in or near one of Chase's tech centers get priority, and that includes H-Town and Big D.

The government-registered nonprofits, foundations, and social enterprises (we're talking everything from food banks to theater companies) selected to participate will have access to a team of up to 10 highly skilled technologists, who will spend approximately four hours per week advising over an eight month period.

Each nonprofit is asked to propose the specific project that would benefit from technology guidance, and it needs to be something the organization can maintain when the project period is over.

"We have more than 50,000 technologists at JPMorgan Chase around the world and they're passionate about giving back," says Ed Boden, global lead of Technology for Social Good programs. "Force for Good gives our employees the opportunity to utilize their unique skills while also learning new ones, to build technology solutions for the organizations that need it most."

If you're the director, CEO, or other person in charge at a nonprofit and you still have questions about Force for Good, Chase has put together a free webinar to help explain further.

These webinars cover the overall program experience and application process, and it's highly recommended that nonprofits watch before applying. The live webinar dates (with Texas times) are June 2 from 1:30-2:30 pm and June 8 from 10:30-11:30 am.

A pre-recorded webinar will also be available for nonprofits to review after the live webinar dates.

Since 2012, Force for Good has worked with over 320 organizations in 22 cities, contributing over 190,500 hours of knowledge and skills.

"It is a great program that can provide strong impact for nonprofit organizations that need technology help," says Chris Rapp, a Dallas-based Chase executive. "As a father and husband of two Dallas artists, I am a huge believer in helping the arts grow and hopefully we can help do this through Force For Good."

The application process opened on May 28, with a deadline to submit by July 10.

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