Alignable: 32% Of SMBs Can't Pay September Rent

DATA INSIGHTS | TREND TRACKER |

For The Sixth Month In A Row, Rent Was A Struggle For Many Small Business Owners, Including Minorities

Editor's Note: This research is part of an in-depth series of polls of over 510,000 small business owners in the U.S. & Canada affected by the Coronavirus. To see more of our findings, go here.

BOSTON, MA, Sept. 11, 2020: Alignable's latest survey conducted just last week shows that times continue to be very challenging for small business owners who need to pay rent. 

Almost one-third of those surveyed (32%) said they just couldn't afford to pay their full rent this month.  Looking more closely at the statistics, minority-owned businesses had the toughest time. Almost half couldn't cover September's rent payment, according to the poll conducted among 5,548 small business owners from August 29 to September 1, 2020.

We've seen similar findings for six months now, and we've heard from many landlords who also face major challenges. While some landlords are giving their tenants a deal whenever they can, in many cases, those landlords are small business owners themselves and can't afford to be all that flexible.

They rely on rent for their livelihoods and it helps to pay their mortgage, which adds an important perspective to any discussion of rent issues.

So, Who's Paying What For Rent In September? 

While 68% of the small business owners polled said they're paying their full rent on time this month, the rest were unable to do that, largely due to the financial strain exerted by the COVID era.

Of the 32% who could not pay all of their rent, here's what they were able to pay their landlords:

• 7% of poll respondents -- paid under 10% of their original, pre-COVID rent
• 4% -- 10% - 25% 
• 6% -- 26% - 50%
• 6% -- 51% - 75%
• 9% -- 76% - 99%

How Does This Compare To Other Rent Polls?

As I mentioned above, Alignable has conducted regular rent polls for the past six months and rent issues have been acute throughout this COVID era, with little sign of changing anytime soon. 

In April,  48% of all renters surveyed said they didn't pay full rent.  In May, that number dropped just a little to 40%. Since then, every month has been somewhere in the 32-34% range.

That means we've spent six months now hearing from renters in a variety of challenging situations. Some have negotiated a better deal with landlords -- either reduced rent and/or delayed rent, others didn't forge a deal but paid what they could and hoped for the best. 

Still others moved to less expensive locations or converted to a 100% digital model and decided to work from home, eliminating commercial rent entirely. 

4% Of SMBs Closed Permanently, Partially Due To Rent

Unfortunately, the others either had to pay more rent than before, and/or faced eviction. Ultimately, 4% of those polled in another recent Alignable survey actually decided to permanently close their businesses when they were denied the opportunity to negotiate better terms by their landlords. 

Something has to give when you're earning much less money than expected.  In fact, our latest poll said 46% of small businesses don't even have half the revenue they had before COVID. When that's the situation, you need to make some hard choices. 

We also heard from many we have polled that the PPP funds they received did, indeed, help them to make rent or get closer to it. But now, Congress is deadlocked on future funding, and most people who had PPP funds have spent them. 

Given this scenario, it's not hard to predict that the percentage of people paying their full rent on time will probably drop soon, unless something changes to benefit small business owners in the coming weeks. 

Which Groups Struggled Most With Rent In September?

Delving deeper into the survey results, unfortunately, we found another pattern emerge that we've seen in past polls on PPP funding, cash reserves, and related topics.

Minority-owned small businesses experienced even more of a struggle than their peers in paying full September rent. 

As this chart shows, 48% of minorities were not able to make their full rent payments this month, compared to 34% of women who own businesses and 32% of nonminorities. 

Our June 12-15, 2020 poll on the PPP sheds some light here. We discovered that minorities did not receive the same PPP loan approvals as nonminorities, putting them at a major disadvantage for paying their expenses, including rent.  

This chart below shows the disparity quite clearly, as minorities received 25% less than their peers in terms of PPP loan distribution. 

It appears that the lack of PPP funds for minority-owned businesses has contributed to the additional issues minorities experienced in trying to pay full rent in September.  Without additional federal support (and soon), several minority-owned businesses run the risk of closing before the end of 2020. 

Finally, looking at last week's poll results in terms of the industries that were most affected, we found that several groups exceeded the 32% figure covering all small businesses unable to pay rent.  

Restaurants, The Arts, Retail & Healthcare 

Small business owners in industries including restaurants, entertainment and design, consumer retail, and finally, health and wellness had more challenges than most with rent in September. 

As the chart below shows, 42% of restaurant owners didn't pay all of their September rent, while the same was true for 40% of the people in creative professions, 35% of the retailers, and 33% of the health and wellness practitioners. 

Those who fared better than the national average included real estate agents and construction/home services firms.

For more information about this poll or others, please contact Chuck Casto at chuck@alignable.com. 

And if you would like to offer your thoughts on the rent issue, please contribute to the comment section below. 

We'd love to hear from you and might even reach out for future Alignable stories or media interviews.

For more of our polls, please go here.