Small Business Rent Delinquency Hits Three-Year High

The delinquency rate for US small businesses failing to pay full rent climbed to 43% in April, the highest level since March 2021, according to a new report from Alignable. The online networking platform’s monthly Small Business Rent survey highlights the significant economic challenges facing entrepreneurs.

The April rate reflects a sharp 4 percentage point increase from March and the largest month-over-month surge in over a year. It underscores the impacts of soaring rents, with over half of small businesses facing hikes in the last six months and 11% paying at least 20% more than last fall.  

Compounding rent pressures, revenues have declined for the majority of firms. Only 32% of pre-pandemic businesses earn as much or more monthly compared to before COVID-19. For companies launched after the pandemic, 60% made less than a year ago, with over a third earning half their 2023 income.

“This year so far has been challenging — depending on the week, we’re up, we’re down, or we’re even with last year. It’s all very unpredictable and hard to manage,” one owner commented in the Alignable survey of 4,171 respondents.  

Independent restaurants top the delinquency list at 52%, followed by science/technology firms at 51% as larger tech company turmoil impacts their project flows. Beauty salons (49%), gyms (48%), musicians/artists (43%) and automotive services (36%) also struggled to make rent.

Texas posted a record high 52% delinquency, tying its March 2021 pandemic peak. Other states with high rates include Massachusetts (47%), California (46%) and New York (39%). In contrast, Colorado had the nation’s lowest rate at 26%.

The rent crisis coincides with diminishing cash reserves, as 34% of owners have a month or less on hand. Inflation remains the top worry for a third of businesses, up from 27% in January. Interest rate stagnation and supply/labor cost spikes also limit financial flexibility.

42% of Alignable’s small business respondents believe that until interest rates are lowered by at least three percentage points, they will be unable to start recovering economically.

The survey was conducted during the first three weeks of April.


Information for this story was found via Alignable, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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