Some $19 million to $45 million in commercial rent goes unpaid every month, with neighborhood commercial corridors hit hardest, according to a report published Thursday by the Board of Supervisors Budget and Legislative Analyst’s Office.
The report, which was commissioned by District 9 Supervisor Hilary Ronen, looked at data from April to December 2020 and concluded that commercial tenants failed to pay between $172 million and $404 million during that time period.
Moreover, businesses existing in mixed use buildings — buildings with commercial use on the ground floor and residential units above — accounted for a disproportionately large percentage of the unpaid rent.
Businesses in mixed use buildings, the report explains, are usually smaller and more prevalent along neighborhood commercial corridors like Mission, Valencia and 24th streets.
Despite only comprising 27 percent of total retail property space, these typically small businesses owed more than half of the unpaid rent from retail businesses. While the report did not determine debt by neighborhood, it named the Mission as the neighborhood with the highest concentration of mixed-use buildings in San Francisco, meaning debt in the neighborhood may also be among the highest.
“It’s reasonable to assume that the neighborhoods with the highest concentration of these high-delinquency businesses would also see the highest rates of unpaid rent,” Brousseau said.
Part of the disproportionate impact on these businesses may be the result of larger companies with better relationships to banks grabbing the lion’s share of the federal aid meant for struggling businesses, according to Fred Brousseau, the director of policy analysis for the Budget and Legislative Analyst’s Office.
“If you look at the results of last year’s distribution, a lot of the funding went to professional services firms and businesses that weren’t even necessarily closed,” Brousseau said.
Brousseau added that many small businesses are owned by monolingual speakers who may struggle to access aid.
“That’s just another hurdle,” Brousseau said, “A lot of the businesses we’re dealing with are speaking Spanish or Chinese or Vietnamese.”
Ryen Motzek, the president of the Mission Merchants Association, said the numbers were not surprising, and that the inequity may also be the result of the high rates of Covid-19 in the Mission, as well as a technological divide separating small business owners from needed help.
“[These businesses] are not fully well versed in all the latest tech and social media to boost their business,” Motzek said “We have to make sure that businesses that may not be as computer savvy, internet savvy get the support they need to help navigate it.”
Motzek said small businesses that are currently struggling to pay their rent should contact their local merchants associations to get help navigating aid applications or even attempting to navigate rent reductions with their landlords.
A Mission bar owner, who spoke with Mission Local under the condition that he remain anonymous to protect his relationship with his landlord, said he managed to negotiate a six-month rent reduction to half his normal payment.
“We really tried to not even go there, but eventually we had to,” the man said. “It was pretty quick, pretty amenable … not drawn out at all,” the resident said, who was surprised how well it went.
“Once that decrease came in we were able to bring people back, give them more hours, we were able to pay other small businesses that we owed, small businesses that are also struggling,” the business owner said, adding that without the reduction, he definitely would have missed some rent payments.
But the temporary reduction didn’t solve all his problems, he said. Unless business picks up soon, he will most likely have to request another temporary reduction soon.
Sandy Flamenco, who runs Joyeria Elvita with her mother, said they applied for small business grants in the city, but did not get any money and had to use their savings to pay their rent. When the savings were gone, they had to resort to loans to appease their landlords.
“It’s a big corporation, they don’t care if we’re in a pandemic, they don’t care if there’s no sales, they just want their pay,” Flamenco said.
Where to get help
Business owners can go to the Office of Economics and Workforce Development website to see a chart of Covid-19-related government relief for businesses, including deadlines and stipulations for each program.
The SF Shines Storefront Improvement Program gives grants to local businesses to pay for storefront changes to improve safety against Covid-19. These include outdoor furniture or large dividers at checkout counters. Apply here.
The Paycheck Protection Program, which grants low-interest loans to businesses during the pandemic, is accepting new applications until March 31. Applicants for PPP loans may qualify for complete loan forgiveness if they spend a majority of the funds on payroll and meet other criteria.
The Economic Injury Disaster Loan is meant for small businesses who have “suffered substantial economic impact,” and comes with a 2.75 percent interest rate for nonprofits and 3.75 percent for for profit businesses. Apply here.
The Mission Economic Development Agency provides assistance for business owners seeking help navigating the application process. Call 415-282-3334. For Mission businesses, the Mission Merchants Association can also offer help.
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