Small business conditions may be more fragile than even bearish observers fear and seem to be worsening quite rapidly in Canada and, particularly, in the United States. According to a survey of more than 6,300 small business owners conducted over the period November 19-22, 41% and 45% of U.S. and Canadian small business owners, respectively, said they could not pay their rent in full and on time in November. Alignable, a small business referral network with clients across North America, conducted the poll.
Furthermore, not only are the current rent delinquency figures in the two countries high, but the trends in those statistics are alarming as well. Just two months ago, only 30% of small business owners in America and 41% in Canada could not meet the terms of their rental contracts.
|% of U.S. Small Businesses Which Could Not Pay Rent in Full and On Time||% of CANADA Small Businesses Which Could Not Pay Rent in Full and On Time|
Reasons cited for the difficulties in making required rent payment were varied, but broad comments on profitability declines are alarming. Indeed, 41% of small businesses said they were earning half (or even less than half) of what they made prior to the COVID pandemic. That proportion was up from 34% just a month ago.
About 73% of small business owners estimated that customers were purchasing fewer goods in November than in the prior month. In an October poll, only 59% issued the same cautionary statement.
Furthermore, and especially hard to believe, only 14% of surveyed small businesses reported they were earning in November 2022 as much or more as they did in pre-COVID days. That 14% figure was a steep drop from 24% in October.
In the U.S., travel/lodging and manufacturing small businesses are faring the best in covering rent payments, while beauty salons and education facilities are generally facing the greatest obstacles. Remarkably, only 13% of small travel/lodging companies reported rent issues during November, down from 34% in October.
In Canada, Ontario’s November rent delinquency rate was 45%, matching the nation’s average. Alberta’s rate, 33%, was the country’s lowest during the month.
Information for this briefing was found via Alignable and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.