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New data shows that 40% of small business owners could not afford to pay their rent in full and/or on time in February. That's up three percentage points over January, which had a rent delinquency rate of 37%.
Alignable's February Rent Report shows that many economic factors are compounding small business owners' financial stress, including the cumulative effects of inflation, an increase in rent spikes, higher prices for supplies and labor, and still-high interest rates.
These findings are based on responses from 4,703 randomly selected small business owners surveyed from Feb. 1–29 and input from more than 100,000 other respondents over the past two years.
Here are more key points from the report:
• Rent spikes on the rise. 55% of small business owners are struggling to cover rent spikes (up three percentage points from 52% in January). Of that group, 16% face rent increases of at least 20%.
• Cumulative economic impact. Negative economic trends are hitting small businesses harder and lasting longer than larger companies, with 71% of small businesses reporting lower revenues compared to last year. Their No. 1 concern is inflation.
• Lower revenues and higher prices. Small businesses are grappling with higher prices for supplies, labor, and food, declining revenues, and high interest rates. Some 40% of small business owners say if interest rates are not lowered by at least three points, they will not be able to rebound.
• Sector and state analysis. 43% of restaurants, 38% of beauty salons, 38% of realtors, and 37% of construction companies couldn't pay February rent. Illinois, California, New York, and Maryland saw escalating rent issues.
Minority-owned businesses saw a decline in rent problems as did industries such as science/technology and travel/lodging. Colorado, Washington, Pennsylvania, and New Jersey had the lowest rent delinquency figures across the country.
To see the full report, click here.