Report: 33% of US Small Businesses Couldn’t Pay Their Rent Last Month

52% of SMBs have dealt with a rent increase within the past six months, with many seeing rent rise more than 20%.
Adam Rowe

The rent crisis is getting worse, according to a new report that found a full third of all small and medium-sized businesses are behind on their rent for the month of May.

That figure has risen 5% since April, and the situation's even worse in Canada, where 39% of SMBs couldn't make rent.

What's driving the crisis? Some of the survey's results suggest the culprit is a wave of rent hikes across the board, paired with outside factors including supply issues and growing gas costs.

Small and Mid-Size Businesses Can't Make Rent

The new data comes from small business networking site Alignable, which released its Q2 Rent Report at the start of the month.

“This latest data demonstrates that the SMB rent crisis has reached a new and concerning 2022 pinnacle, regarding both rent delinquency and soaring rent costs,” Alignable explains in a summary.

The data shows that the reason why businesses can't make rent isn't that the businesses are earning less: It's because the rent has simply become too darn high. Or, to put it in more clinical terms, 52% of all SMBs polled have dealt with a rent increase within the past six months.

Within that majority of businesses, 18% self-report a rent raise of between 10% and 20%, while another 14% report a rent raise of more than 20% from what they were paying just six months earlier.

A business' physical location is a key reason why local consumers drop by, so moving to a new spot can lead to a dip in sales. But business owners are trapped between a rock and a hard place — moving locations sets them back and paying significantly higher prices for staying in the same spot also hurts them.

Surviving as a Small Business

The business outlook is grim in 2022 even without exorbitant rent increases — supply-chain issues have increased expenses for transporting goods, gas prices are also on the rise, and a healthy labor market means that employees won't stick around for low wages.

Some industries have it worse than others, according to the Alignable report. Restaurants have it the worst, with 41% failing to pay rent in May, up 8% from April.

Rent crisis report

The strongest uptick emerges when the data is broken down to highlight minority small business owners: 56% of those polled could not pay their May rent, which is up 20% from 36% who couldn't make rent the month prior.

In a sense, the Covid-19 pandemic remains ongoing. That's true in the business world as well, with only around a third of businesses having recovered from the 2020 downturn:

“As of today, only 31% of small businesses have recovered fully,” Alignable says, “reaching their pre-COVID monthly revenue numbers. While that represents a 4% increase from April, it doesn’t come close to covering skyrocketing costs incurred by many small businesses.”

Businesses can rely on some software solutions to slightly reduce their costs — a good POS system can manage every aspect of a retailer or restaurant for a monthly price that comes out to a dollar or two a day.

But to be honest, that won't go far. There's no easy solution behind the dismal data on display. Many businesses will need to cut costs, move locations, or go under in the coming months.

One industry that's on the way up, however, are massage therapists: Their collective rent delinquency rate dropped down to just 17% in May, down from 33% in April. Perhaps all the other small business owners are getting massages to deal with their stress.

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Adam is a writer at Tech.co and has worked as a tech writer, blogger and copy editor for more than a decade. He's also a Forbes Contributor on the publishing industry, for which he was named a Digital Book World 2018 award finalist. His work has appeared in publications including Popular Mechanics and IDG Connect, and he has an art history book on 1970s sci-fi coming out from Abrams Books in 2022. In the meantime, he's hunting own the latest news on VPNs, POS systems, and the future of tech.

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