Can’t afford your rent? What are your options?

If your business is struggling to pay rent, there are a range of options available to help ease the burden.

Like many retail businesses at present, you may be battling to survive after the coronavirus pandemic drastically reduced your cashflow. Paying your rent might now feel like a serious difficulty.

Restrictions in the law (the Coronavirus Act 2020) that stop commercial landlords forfeiting (ending) a lease because the tenant has failed to pay rent were extended by the Government until 25 March 2022.

However, when these restrictions are lifted - and if the Government doesn't extend them further - you'll need to pay what you owe. So what are your options?

Read on to learn what you can do to ease this financial burden.


Your simplest option is to try and negotiate with your landlord. You might be able to request:

  • a rent waiver - where your landlord agrees not to charge rent for a period of time
  • a payment plan - an agreement to pay rent in instalments, as a way of reducing your immediate outgoings

Of course, after months of lockdown, the amount of rent you continue to owe might still be significant, even after negotiating better terms with your landlord.

Five steps to follow

Lewis Couth, director in the Real Estate Litigation team at law firm Walker Morris, recommends the following five steps:

1. What's in your contract?

Understand what you've agreed to in your contract with the landlord and act responsibly. Don't assume your landlord will release you from your lease, even under current circumstances.

2. Be open with your landlord

Dialogue is crucial. Tell your landlord as soon as problems occur and see if they're prepared to help.

The Government is encouraging tenants and landlords to work together in these uncertain times, and most commercial landlords are prepared to collaborate with tenants who engage with them. Those tenants who ignore the issue and simply stop paying rent only serve to frustrate their landlords and make them less willing to negotiate.

3. Find practical solutions

In most cases, it's in both your and your landlord's interest for your business to survive COVID-19. Given the sudden and negative impact on cashflow, your best option may be to work with your landlord to agree practical and commercial solutions to navigate the coming months.

For example, a landlord may consider being flexible about renegotiating (known as re-gearing) or restructuring rent payments or debts to preserve your relationship with them, even if they have no legal obligation to do so.

4. Keep written records

Always document any agreement you reach with your landlord.

5. Dispute resolution

When disagreements arise, check whether your lease contains a mandatory dispute resolution clause.

This would require you and your landlord to follow a set route for resolving your dispute. As a result, you can avoid secondary disputes about how the process should go, limit tactical game-playing, and cut down on time, effort and cost.

Seek equity funding

Equity funding could be what your business needs to bounce back once the pandemic has passed.

Investors are abundant and looking for a good deal. And it isn’t just their cash that’s available, but their expertise too. Shaun Barton Real Business Rescue, part of corporate recovery specialist Begbies Traynor

Apply for a recovery loan

If COVID-19 has affected your business, you may be eligible for a recovery loan under the Recovery Loan Scheme (RLS).

The loans are designed as financial support to help you recover and grow after the disruption of the pandemic.

You can use the money for any legitimate business purpose, including managing cashflow, investment and growth.

You can apply to the scheme no matter what your level of turnover.

The loans are available through a number of UK lenders accredited by the British Business Bank.

A key aim of RLS is to improve the finance terms available to you.

However, if a lender can offer you the choice of a commercial loan on better terms, without requiring the guarantee provided by the RLS, they should do so.

Use a restructuring expert

If you're not sure whether your business is able to trade profitably, and you can afford the fees, it may make sense to have a restructuring expert assess your current financial position and likely future cashflow projections.

This puts you in the best place possible to understand your options and whether you need to go through a formal insolvency process.

If you decide to pursue insolvency, you have two formal options:

  • A company voluntary arrangement (CVA)
  • Administration

Scroll down the page to find more detail on these options.

A company voluntary arrangement (CVA)

Company voluntary arrangements (CVAs) allow your business to use future profits to service existing liabilities.

They can be an effective way of reducing your monthly outgoings while binding all creditors to a repayment contract.

If the business is still fundamentally viable, a CVA does not only allow a business to restructure its financial obligations; it also provides the opportunity for a company to re-evaluate its operational structure and streamline its assets. Shaun Barton Real Business Rescue, part of corporate recovery specialist Begbies Traynor

The CVA process allows you to negotiate leases that place heavy obligations upon you.

This immediately frees up vital funds that you can use to support areas of the business that generate the most revenue.

It's a route that a number of large high-street chains, such as Caffe Nero and Pizza Express, have adopted.

Possible drawbacks

One of the main disadvantages of a CVA is the need for your creditors to consent to it.

To make the arrangement legally binding, at least 75% (by value) of creditors within the CVA must vote in its favour.

If you can get creditors on board, however, a CVA could be the opportunity you need to get your finances back on track while continuing to trade.

Big fashion retailers, such as New Look and AllSaints, have gone down the CVA route, and landlords have had turnover-based rents forced on them.

Landlords have criticised retailers for taking this action.

Retailers do not enter into a CVA lightly. They cause understandable concern and uncertainty for employees and suppliers. However, CVAs are one of very few ways that a company in distress can restructure to keep trading, employing staff and contributing to the UK economy. Where CVAs result in a lowering of rent obligations, this is usually to help reset historic rents to more up-to-date values. Rents remain out of kilter with market values, which highlights the need for continued protection for commercial tenants from aggressive debt enforcement by landlords. Dominic Curran property policy adviser at the British Retail Consortium

Fast Track CVA

Another solution is a Fast Track CVA. This works similarly to a standard CVA but over a shorter timeline, usually around six to eight weeks.

It specifically allows smaller, owner-managed businesses to return to 'business as usual' as quickly as possible, in a supportive environment. This can work for those businesses that were profitable before COVID-19, according to Begbies Traynor.


Company administration protects you against legal action from creditors. It allows an appointed insolvency practitioner to come in and develop and implement a rescue plan for your business.

When you first enter into administration, there is an eight-week period during which your creditors are prevented from taking or planning any legal action. This gives the appointed administrators the time and space they need to formulate a plan for the business' future.

One thing to understand is that administration doesn't always succeed in rescuing your company as a whole, meaning you may need to make redundancies. The administration process often works by identifying parts of the business that are viable and attempting to secure these as a going concern.

Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

Making business finance work for you

Our Making business finance work for you guide is designed to help you make an informed choice about accessing the right type of finance for you and your business.

Read the guide to making business finance work for you

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