The time to talk forbearance is now
David Miller

The time to talk forbearance is now

With all but 'essential' retail premises forced to shut up shop, there is little money coming in for most retailers, especially if they do not have significant online presence or delivery systems.

Margins are tight at the best of times, so anything as severe as the impact of the coronavirus lockdown is inevitably going to leave businesses struggling to meet outgoings.

What has probably not helped is the degree of confusion about the support on offer to retailers. Because there has been a variety of messages about government guarantees, a freeze on possessions activity, different interpretations of the forbearance being offered by lenders, and so on, commercial tenants struggling to keep their businesses afloat may have been encouraged to think that their best course is simply to withhold payment until they can establish what help is available to them.

While the freeze on evictions announced by, the government will provide them with protection in the short run, this approach risks storing up considerable trouble and indeed jeopardises a number of otherwise viable businesses.

There certainly needs to be greater clarity about what support retailers are likely to be able to rely on, but this should not be a reason to simply skip payments. Otherwise, the tsunami of arrears that will crash onto the retail sector once the lockdown is over will sweep away not just already struggling businesses, but a good many that were getting by prior to the crisis.

It still seems a fairly distant prospect, so perhaps everybody needs to be reminded that the current crisis will end at some point. Life will return to something approaching normality, even if that looks a bit different from what we’ve been used to. Even before the coronavirus struck, this has been an extremely difficult period for landlords, too, and when restrictions are lifted, they are going to need to chase arrears.

They would be well advised to show a degree of forbearance, but that will be limited by their own funding, and they will need to prioritise. Business owners need to think about this carefully, especially if they have furloughed staff who might otherwise act as the conduit in a conversation with their landlords. 

The time to have that dialogue is now, when the situation is more likely to be manageable and a fair and mutually acceptable solution can be found. Three or six months down the line, with substantial arrears piled up—along with, no doubt, a mountain of other bills to be paid—it may well be too late.

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