Small Business Owners' Inability to Pay Rent Highest Since Pandemic
Business polls point to multiple factors hurting business; landlords impatient.
Troubling trends are piling up for small business owners, particularly for women and minority owners, the key one is their inability to pay rent.
According to a poll by Alignable, 45% of poll takers said their rent is at least 50% higher today than it was prior to COVID with 24% saying it’s at least twice as high.
“Even more alarming, 12% noted their rent is more than three times higher than it was before the pandemic,” Chuck Casto, head of marketing at Alignable said in prepared remarks.
As a result, rent delinquency rates for August (40%) are at their highest since March 2021 – the mid-point of the pandemic. This is up 6 percentage points from July.
These findings emerged from a poll of 7,331 randomly selected small business owners from Aug. 13 to Aug. 23.
Among those taking the poll, they blamed these reasons most for their business challenges:
- rent spikes
- higher-than-normal gas prices
- increases in the cost of supplies and labor
- elevated interest rates
- reduced consumer spending
- and other emerging recessionary trends.
Cost of Goods, Gas Prices, Labor Hurting Owners
According to a survey by BizBuySell, asking owners what was having the biggest negative impact to their bottom line, ranked first was the high cost of goods (21%) followed by gasoline costs (17%), labor costs (16%) and reduced customer spending (16%).
Adam Debussy, Marketing Director at BizBuySell, tells GlobeSt.com that “a business’s ability to manage through these economic challenges will have a direct correlation to their ability to pay rent.”
Casto said that some landlords have been able to defer rent requests during the worst months of COVID, but now “they’ve gone without much of their income for over two years. Many tell us they can’t hold out any longer.”
According to Alignable, minorities in August suffered the most, as 53% of minority-owned businesses could not pay their rent in full and on time (up 4% from July). Similarly, 42% of women-owned firms couldn’t cover the rent (up 7% from last month), Alignable said.
Furthermore, Canada’s delinquency rate in August was 48%, up 11% from 37% in July.