35% of Business Owners are Unable to Pay Rent
The small business economy has adapted and overcome in so many ways over the last 9 months. But as 2020 comes to an end, it’s clear something more needs to be done by the government to support the businesses hardest hit by this pandemic.
As we wait for them to take action, we’re looking to our members for creative ways you've worked with landlords (many of whom are small business owners too) to reduce the financial burden you're facing. This is especially important because there are dwindling ways to generate income as states push toward re-closure to control Covid.
Here’s the Latest Data on Businesses Struggling to Pay December Rent
Overall, 35% of you told us that you couldn’t make rent for December. And when we asked you about your need for financial assistance, 85% of you stated you needed it to get through to June, with the second most important use of the proceeds going toward paying rent.
While governmental relief will help greatly, betting entirely on legislators to work together and get things done on a timely basis is a bit of a fool’s errand.
So we invite you to share your stories of how you as a business owner or landlord have worked together to find solutions to this massive challenge.
Personally, a good friend of mine who owns a men’s clothing store in NYC shared how he and his landlord had worked together. Until store traffic recovers, he simply pays a percent of his revenue in lieu of rent. How about you? What things have you tried?
In addition to sharing your thoughts in the comments, if you or your business lines up with one of the groups we’ve identified below, we invite you to join that group. There, you can interact with your peers and idea share.
Here's how various groups are faring when it comes to rent.
Women-owned businesses
Overall, 38% of women-owned businesses were unable to pay rent in December, which was up from 35% in November.
If you’re a women-owned business and would like to discuss this issue and others with your peers, we invite you to join this group: women business owners group.
Minority-owned businesses
Overall, nearly half (49%) report being unable to cover rent in December. A figure that’s jumped 5% from 44% in November. If you’re a minority business owner, you’ve also had more than your fair share of challenges this year.
If you want to connect with other business owners who can relate to your experiences and help you through them, there are a few groups you can join:
Veteran-owned businesses
When it comes to adapting and evolving, veteran-owned businesses have a leg up from their training and experiences in dealing with adversity.
While we've seen that you're recovering at somewhat higher rates, there are additional experiences and challenges faced by veteran-owned businesses.
We’ve also created a group just for you where you can share those insights and experiences with each other. You can find it here: veteran-owned business group.
What Industries Are Struggling the Most With Rent?
While many of you are struggling with rent, a few industries are hit harder than others.
Here are the top four industry segments along with links to their respective groups on Alignable. There, you can share ideas and resources you’ve found to get through these challenging times.
If you fall into one of these categories and want to chat with others in your industry, click on the link and join the group.
If we’ve not yet created a group that aligns well with your background or industry, have no fear—we're working on expanding these awesome groups as fast as we can. You can learn more about our groups in our Groups Resource Center.
In the meantime, share what’s working for you. If you're a landlord, how have worked with your clients to mitigate this challenging situation? If you're a tenant, how have you managed to work with your landlord?
Comments (1-10)
Realistically, I think there needs to be a forgiveness of some sort where business owners can opt out of their lease without penalty if they don't foresee survival. This pandemic is not in anyone's control to be able to strategically plan how to create revenue, as most businesses are suffering unless your in healthcare. Many are having to find jobs and close the business doors, so in reality, how can we pay rent to commercial lenders?
First of all our business was considered essential and our business has been on fire! But this pandemic illustrates the fallacy of paying rent! We own our property and it is paid for! When recessions/depressions occur we do not have that big rent nut to crack every month! And that alone will help you weather times like these. I expect to see commercial real estate to enter a long and sustained depression. New tools are now available for corporations to allow people to work from home. Job satisfaction is up... and when this pandemic is over demand for commercial real estate will just not be as high. Then you add what is happening in transportation, Very soon electric self driving vehicles will become mainstream and you will begin to see a service called TAAS emerge. (Transportation As A Service). You will pay an annual fee and load a app on your phone and anytime you need to go somewhere you will summon the type of vehicle you need. It will take you to your destination and drop you off and head to the next fare. This will put money back into every car owner’s pocket as you will no longer need to own a vehicle. There will be no need for big parking lots. Only drop off and loading zones. An enormous amount of prime commercial real estate is tied up in parking lots. This will also affect municipalities... parking and parking garages will no longer be needed. Revenue in parking citations will be eliminated... E-commerce will also continue to shrink the commercial real estate market.. Commercial Real Estate only has one long term trend and that is down. And this will be a boon for those companies that decide to buy commercial real estate rather than lease commercial real estate.
We are struggling. Understatement of the Year. Revenue is down 65% from pre-Covid levels. Started a GoFundMe account for Business. Moderate success, but still a drop in the bucket. The goal is to survive long enough past the pandemic (possibly April, May) when numbers drop due to vaccine rollouts? The reality is that our EIDL loan has run out and the lack of revenue isn't enough to stay afloat. Very well may have to shut our doors permanently in January. No help from our commercial landlord, either. No mercy.
We don’t need “stimulus” we need to open the economy. We’re Americans and we want to work.
I'm fortunate to have my studio as part of my home, so I only have to pay mortgage once! That makes it easier and the overhead is tax deductible at the end of the year. I do worry about sales a bit, even though I have several online platforms for marketing. What do you folks do to market in these uncertain times?
Meg
My landlords at all of our personal training studios have been supportive. We have been in business for 20 years and while we do a lot of virtual personal training the bread and butter is the in studio training. I’ve been paying what I can. That’s about 75% of what it was and they realize I’ll never be able to pay the back rent. This isn’t their fault either. My only fear is that they find someone else that can pay full rent right now. It is a business and I understand they need to make money also and if they can get full rent I get it ,but seeing as how not many new places are going to come in and take up the space and pay full rent I feel I’m being fair and doing the best I can. They realize eventually I’ll get back to paying full rent and at a time like this the goal is just at least make enough to survive. And what I’m paying allows me to do that and them.
Fixed costs for SMBs are too high - particularly rent paying for physical space. Avoiding high fixed costs are a must for my businesses. I currently operate 3 businesses - all from the cloud and they’re doing just fine. Having a software and marketing background certainly has helped. Redesign the business model with less fixed costs and more variable costs to maintain control. Fixed costs will destroy any business.
Our non-profit funding simply dried up. We are shifting to asking the people we train help with expenses in the form of tuition but we work with disadvantaged youth-at-risk so this can only be a short term solution
I was in the process of writing to our PG landlord to please consider not increasing the rent this year due to Covid-19, when I heard from the property managers office that they had requested he do the same, to not raise the rent. He refused and said he still is raising rent. I have not worked since March 14, 2020. I will send my letter anyway. We’ve been trustworthy tenants. I find it a little heartless to not work together at the time.
maybe, this horrible mayor, open up businesses, with masks and social distancing, like they do in Florida, Funds were already given to Cuomo early this year, where did the money go?? This management is going to cause us to go under next year,