Air Date

October 13, 2020

Featured Guest

Lenore Horton
Partner, FisherBroyles LLP

Moderator

Jeanette Mulvey
Vice President and Editor-in-Chief, CO—

Share

Amid PPP loans and EIDL advances, small business owners have a lot to juggle when it comes to finances — including negotiating with creditors and landlords. If it’s not feasible in the current market climate for you to meet previously agreed-upon payments, it’s time to have an honest discussion with creditors (or landlords) about renegotiating agreements.

For many business owners, the prospect of starting these conversations is daunting. However, transparency can be a useful tool in negotiating new agreements, especially when that honesty includes the plans and steps you’ve taken to ensure your business emerges from the pandemic as successfully as possible.

Start With Transparency to Build Trust

For small business owners looking for advice when negotiating with specific parties like creditors and landlords, Lenore Horton, a partner at FisherBroyles LLP, suggested prioritizing open and honest communication about your current financial situation, “especially if you have a debt where you know it's not possible to meet those obligations until you reopen or until you are back at more consistent market levels for your business.”

Starting the discussion will be different for every business owner, Horton recognized. “For some of them, it's not a difficult conversation, and then for others, it could be a rather long negotiation.”

What is a Small Business Owner’s First Step?

“Be proactive and keep the conversation going,” Horton advised. “For example, [we’ve] seen [situations] where we draft letters and help the client craft communications to their creditors to explain what's going on and what they're doing to generate new revenues or how they're looking to pivot.”

Horton’s advice, to explain how the organization is performing and what’s been done to remain successful despite current circumstances, is helpful to all small business owners, regardless of sector or niche. The pandemic has affected every person and every business, and candor can help build the bridge to a mutually beneficial renegotiation for both parties.

Communicating is better than keeping landlords and creditors in the dark, even if it’s a tough conversation. Horton advised her clients to “[make] sure those creditors stay in the loop as to how the business is doing because radio silence is not going to be a confidence-building measure for those who owe money right now.”

“Being proactive and having a degree of transparency is important,” she added. “There are other options [later], but I would say that is definitely the starting point.”