Landlord demands $20K in back rent from California gym or owners must leave

SONOMA, Calif. - President Biden has made COVID-19 response and economic relief top priorities, but for thousands of small businesses, help won't come soon enough.

After 11 months of struggle, many are at the end of their financial rope.

"What people need to understand is small business needs help now," said Jenny Kovacs, who owns Sonoma Fit with her husband, Adam. "It is bad and going to get really bad over the next few months."

Six years ago, the couple began to grow a single fitness studio into three full-service gyms, in Sonoma, Petaluma, and Novato.

They hoped and expected to survive the pandemic, but that optimism has faded.

"We have exhausted every possible avenue to weather this storm and we're alone, no one really cares," said Jenny.

On Wednesday, as a new administration promised relief, the Kovaks found a notice on the door of their Sonoma facility.

"Notice to pay rent or quit," read Adam aloud, "a three-day notice."

It was a demand from his out-of-state landlord to pay $20,000 in back rent or vacate the premises in 72 hours.

They don't have the money.

"We literally sent them a screenshot of our empty bank account, that's the level of desperation we've reached," said Jenny.

Like so many business owners, the Kovacs were optimistic in the beginning, modifying their gyms to make them COVID compliant.

Among the changes: limited capacity, remote check-in, limited workout time, and equipment spaced apart and sanitized between uses.

In June, indoor fitness did resume for a few weeks, but never again due to ongoing local and state public health orders.

Now, a roster of 1,300 gym members has shrunk to a few hundred, allowed outdoors only.

"And we have been paying our bills, paying everyone to the best of our ability but we just have nothing left," said Jenny.

Their last federal assistance came in April, and was spent, as required, on rent, utilities and employees.  

Since then, the Kovaks have maxed out their credit cards and taken no income.

They are down to a minimal staff and have applied for every form of aid they could find.

"It's all talk, it's all talk," said Adam derisively, of the programs touted by government officials.

A second application for PPP money is under review, and a state grant of $25,000 is also pending.

The Kovaks have no confidence it will arrive soon; they've been disappointed before.

"It's all garbage, all those programs don't work, they just help big corporations," said Adam.

Data suggests well over 100,000 small businesses have closed permanently during the pandemic.

They are generally identified as operations with fewer than five locations or less than 500 employees.

They also employ about half of all working Americans.

And the Kovacs fear when the pandemic finally ends, the mom and pop operations that have disappeared will change the character of many towns.

"What's going to be left is Amazon, Walmart, and Target," warned Jenny, "and how involved are they in their communities?"

The pair insist they take the health threat and are alarmed by the widespread illness and loss of life.

But they note fitness facilities have never been shown to be a significant spreader of the virus.

"We're going to be forced to file for bankruptcy, we're going to have nothing left and our story is not unique," said Jenny.

Restaurants, salons, and other public-facing enterprises face the same hardship.  

"COVID did not kill small business, the government continues to kill small businesses, it's not COVID," said Adam.     

Between their 3 locations, the Kovaks owe about $1 million in deferred rent to their landlords.

The $20,000 demanded by one is a fraction of that, but Jenny answered with a written plea.

"As a mother, I am literally begging you to give us another two weeks to pay you," the letter reads in part.

"We just can't afford to pay you before February 1st unless by some miracle we get the PPP money sooner than anticipated," it continues.

To the Kovacs, the prospect of losing one gym feels like the beginning of the end.

"It feels like failure," said Jenny, "and just incredibly painful."

Shutting down, they say, would make their years of work and sacrifice, and their 11-month struggle, all for nothing.

It weighs heavily.  

"Every day," said Adam, emotionally. "I continue to choose not to be a victim, I continue to fight but it's hard, it's hard."

Sonoma has a moratorium on commercial evictions, but only through March.

Debora Villalon is a reporter for KTVU. Email Debora at debora.villalon@foxtv.com and follow her on Twitter @DeboraKTVU.