February 1, 2023

Economic downturn Warning: US Small Businesses Fighting to Pay Rent

The number of smaller businesses failing to make rent payments has increased steadily over the last a few months.

Within another sign of a having difficulties economy, small businesses are having an increasingly hard time paying rent.

According to  Alignable’s November Rent Poll , 41% of US small businesses reported they couldn’t pay their rent in full and on time in November. Which was a 4 percentage-point increase from the previous month.

Alignable surveyed 6, 326 US small businesses among Nov. 19 and Nov. 22.

The amount of small businesses failing to make rent payments has increased steadily over the last several months. Delinquency rates increased 7 percentage points through 30% to 37% in October.

According to Alignable, delinquency rates generally fall in Q4 with more money coming into most businesses. “ But so far this one fourth, the opposite has been true. ”

Small businesses surveyed by Alignable cited various reasons for their struggles for making rent.

  • Increasing rents : Fifty-two percent of smaller businesses said their rents have got gone up, putting a strain on their budgets.
  • Declining Revenue : Forty-one percent of small businesses stated they are generating half or less revenue than they will earned pre-COVID.
  • Reduced Consumer Spending : In October, 59% of small business owners said customers purchased less from them compared to prior month. That number increased to 73% in Nov.
  • Inflation : Sixty percent of small businesses said inflation was putting them under significant strain.

The retail sector is being particularly hard hit. Forty-four % of small businesses in the retail sector reported rent delinquency. More than half (52%) said imply expect to see any improvement in their businesses in the fourth quarter.

Alignable provided some other data over the retail sector that backs up the pessimism.

  • 40% expect to create less in Q4 ‘ 22 than they do in Q4 ‘ 21
  • 10% state inflation’s so bad, they could need to close,
  • 1% have already shut down
  • 41% say Q4’s been disappointing so far, however they still hope for a surge in sales
  • And only 8% expect Q4 ‘ 22 will be their finest quarter ever

Rent delinquency in the small business sector,   along with other economic data , supports the conclusion that the ALL OF US economy is already in a economic downturn. Peter Schiff called it a “ stealth recession” because “ nobody really wants to acknowledge that it’s actually here. ”

Yet it’s pretty clear that between  rising prices squeezing everybody’s wallet   and slowing economic activity, the US economy is not in a good place.

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