Can’t Pay the Rent: Number of Small Biz Having Challenges Rises

CUToday

BOSTON– Some 40% of small business owners could not pay their August rent on time and in full, up 6% from July, according to Alignable’s August Rent Report.

Prior to the most recent analysis, the highest rent delinquency rate in 2022 was 35%.

“Beyond that, the 40% rent delinquency rate is the highest in nearly 18 months, reflecting the all of the forces hindering the recovery of many small businesses,” Alignable said.

The new survey is based on a poll conducted from Aug. 13-23 among 7,331 randomly selected small business owners.

The survey found only 23% say they've fully recovered to their pre-COVID revenue levels (down 2% from July).

“This is the worst monthly recovery rate we’ve tracked in the past year,” the company said.

Other Findings

Other highlights from Alignable's August Rent Report:

• 45% say they’re paying at least 50% more in rent than they did prior to COVID; 24% have landlords doubling their rent, and 12% say they’re paying three times more.
• Rent issues are even worse for minority-owned firms, as 53% of their owners say they couldn’t afford August rent, up 4% from July.
• Most industries saw an increase in rent delinquency rates, with agriculture (50%), nonprofits (46%), restaurants (46%), automotive (44%), education (44%) and travel/lodging (44%) topping the list for August.
• 40% of SMBs in real estate are in the same situation, doubling their delinquency rate since April, when it was 20%.
• Regarding the states, 55% of small businesses in Colorado, 53% in Illinois, 52% in Georgia, 44% in California, 44% in New York and 40% in Texas couldn’t pay their August rent in full and on time. These are the states suffering the most with SMB rent problems.
• On the opposite end of the spectrum, Massachusetts & Pennsylvania were the only states seeing an improvement in rent issues from July to August.
• For Canadians, the situation is even more severe than it is in the U.S. with 48% unable to pay August rent, up 11% from 37% in July.
• In terms of provinces, Ontario is the highest with 51% unable to afford rent, up 15% from July, when the rent delinquency rate was just 36%.

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