Alignable: 44% Of Minority-Owned Small Businesses Can't Afford To Pay Full Nov. Rent
DATA INSIGHTS | TREND TRACKER | Alignable's Monthly Rent Poll, conducted among 8,092 small business owners from 10/24-10/27/20, found that 44% of minority-owned small business owners could not afford to pay their full rent on time in November.
That's compared to 35% of women-owned businesses and 32% of nonminority-owned small companies.
Similar trends were seen among minority-owned and women-owned businesses in terms of who received PPP funding earlier this year.
And now, with no additional PPP program in sight, the lack of federal funding is causing even more burdens for businesses that are most-affected by the devastating effects of the COVID threat.
Lack Of Federal Funds + COVID Surge = Tougher Times
Unfortunately, the rent struggles, and related cash flow issues, are not likely to improve any time soon given the surge in COVID cases across North America. Small business owners say that surge is elevating their fears that the government will force them to close their ailing businesses once again. In some cases, that could mean those businesses won't survive into 2021.
Rent By Province Or State
When looking at rent issues geographically, 36% of all small businesses in Canada couldn't pay their full rent. The overall number for the U.S. was 32%.
The range in provinces is 43% in Saskatchewan to 32% in British Columbia. In the U.S., New York's small businesses are among those having the most trouble paying full rent, as 40% of them are struggling.
At the other end of the spectrum, only 25% of SMBs didn't pay their full rent this month in North Carolina.
Here are the figures for several other states:
- AZ (26%)
- CO (26%)
- MA (27%)
- WA (28%)
- OH (30%)
- PA (31%)
- TX (31%)
- FL (32%)
- MD (32%)
- CA (33%)
- MI (34%)
- VA (34%)
- NJ (35%)
- GA (36%)
- IL (36%)
Which Industries Are Struggling Most With Rent?
Looking at the top categories, Beauty Salons (46%) and Restaurants (42%) are having the toughest time paying rent in November, a trend that's been happening for a few months now, unfortunately.
Retailers, Gym Owners & Entertainers Round Out Top 5
Other sectors facing major challenges with rent include Retail (38%), Gyms (38%), and Entertainment (36%), largely because of struggles attracting customers.
Sadly, for entertainers, many note that their businesses will not be able to thrive until public spaces like theaters are fully open to the public. Many theaters have been closed since March.
In contrast, only 23% of Real Estate agents and 22% of Accountants didn't pay their full rent, largely because those professions have been less impacted by COVID limitations.
For more details on this survey, please contact me at chuck@alignable.com.
Comments (1)
It appears many REIT's are reporting rent collections over 90%.
REIT Industry August 2020 Rent Collections.
The August survey focuses on three property subsectors: apartments, free standing retail, and shopping center retail. The results show gains made last month for retail have held steady for free standing and improved further for shopping centers.
August
24, 2020 - Nareit conducts a monthly survey of REIT rent collections in
the wake of the COVID-19 pandemic and related economic dislocation.
Given that rent collections in the industrial, office, and healthcare
sectors have stabilized at high levels, the August survey focuses on
three property subsectors: apartments, free standing retail, and
shopping center retail. The results show gains made last month for
retail have held steady for free standing and improved further for
shopping centers. Apartments show no change despite the expiry of
federally subsidized unemployment. Rent collections for apartments have
remained high and steady over the whole five-month period.
Nareit’s survey includes listed equity REITs that combined own and operate between 10% and 20% of commercial real estate in the U.S.
Table 1 shows the estimated REIT rent collections from April to August as a share of typical rent collections. A visualization of the results is in Chart 1. The results are displayed by property sector and are weighted by respondent REIT equity market capitalization.
The survey participants represent 72% of the FTSE All REITs total equity market capitalization for the three covered property sectors (apartments, free standing retail, and shopping centers).
Chart 2 shows the percentage of rent owed granted deferral or forbearance by equity market cap. Survey respondents had shown a mostly steady decline in deferrals and forbearance from May to July across the three property subsectors. Apartments saw a small uptick in deferrals in August, while free standing was unchanged from July and shopping centers declined. Forbearance remains low, but all three subsectors saw a very slight increase in August from July.
Results
- Apartment collections remained substantially the same at 96% of typical rents collected in August. Since May, rent collections have hovered around the 95-96% mark.
- August survey respondents reported an uptick in rent deferrals granted. Deferrals had been declining since May’s high of 3% of rent owed, falling to less than 1% of rent in July by equity market cap. August deferrals increased slightly to 1.4%.
- There are more than 16,000 REIT-owned free standing retail establishments across the U.S., including big box stores, pharmacies, convenience stores and restaurants. Free standing held onto gains made in July at 91%. While May and June survey respondents in free standing reported granting rent deferrals for over 17% of their May and June rent, July deferrals were down to 7%. August deferrals remained at 7%.
- The U.S. has nearly 2,700 REIT-owned shopping centers. Shopping center REITs continued to make gains in August up to 80% of typical August rent collected, up almost 8 percentage points. Rent deferrals showed improvement, down to 5.2% in August from 6.5% in July. However, the sector’s forbearance rate for August survey respondents was up to 1.9% in August from 0.9% in July.