Alignable: 53% Of Minority-Owned SMBs Can't Pay June Rent (Up 8%)
TREND TRACKER | DATA INSIGHTS | BOSTON, MA -- June 16, 2021: Results from Alignable’s June Rent Poll have just been released, revealing that 37% of small businesses across the U.S. could not afford to pay their rent in full, on time this month. Despite many COVID restrictions loosening and more businesses reopening, many small business owners’ rent problems continue to be severe.
In fact, several states saw an increase in rent issues among small businesses, including New York (47%, up 7%), Virginia (47%, up 1%), Arizona (38%, up 12%), North Carolina (37%, up 5%), and Florida (36%, up 3%).
And for minorities, the statistics were even more alarming. Last month, 45% of minority-owned businesses couldn’t afford their rent, while in June, that number jumped eight percentage points to 53%.
This data is particularly disturbing as minority business owners throughout the COVID Era have struggled more than their peers and reported receiving less support than the general population in terms of PPP loans.
Minority-Owned SMBs: A More Stressful Recovery
Based on the findings in this week's poll, the majority of minority-owned businesses appear to be experiencing a much tougher time with their recovery now, too, as this chart clearly demonstrates.
Only 35% of the nonminorities polled couldn’t pay their rent in full, compared to the majority of minority-owned businesses (53%). The national average was 37%.
Based on Alignable's June Rent Poll conducted from 5/22/21 to 6/15/21 among of 3,814 randomly selected small business owners, several factors are contributing to mounting rent issues across the U.S.
- Inflation continues to grow, due to supply chain shortages and price hikes. And 67% of SMBs worry it will impede their recovery.
- Labor shortages abound among many businesses that desperately need help to generate the revenue required to bounce back. In fact, now 55% of SMBs say they can’t fill necessary positions, up 5% from last month.
- Confusion reigns as restrictions are lifted. Some 32% of SMBs say they’ll still require customers to wear masks in their establishments to promote a safe environment, even if their state says vaccinated people no longer need to wear them.
Beyond all of those hurdles slowing economic recovery from coast to coast, Alignable’s June Road To Recovery Report showed that 57% of small business owners only have half or less of the monthly revenue they had prior to COVID. And 48% said they’ve had trouble bringing more than half of their customers back.
Many Restaurants Still Grapple With Rent & Labor Shortages
And while restaurants have benefited from widespread reopenings, and extra support from the Restaurant Revitalization Fund, now 39% of restaurant owners polled said they can’t cover June rent. That’s not as bad as last month’s figure of 49%, but it’s still significant.
Unfortunately, restaurant owners find themselves in the middle of the labor shortage issue, so many owners tell us they can’t reach their revenue goals without the proper staff to handle an expected influx of customers. Of course, that affects their ability to pay full rent, as well.
In a related Alignable poll, 71% of restaurant owners support recent moves by half of the states withholding the extra $300 unemployment benefit, expecting those policies to help correct the labor shortages.
As you can see from this chart, several other industries that are wrestling with their recovery support withholding the extra unemployment benefit.
Beyond Restaurants: Travel, Construction & Transportation
It’s no surprise to see that the majority of small business owners in other key industries also support withholding the extra unemployment benefit, in hopes of filling open roles at their companies sooner rather than later.
As evidenced below, several of those sectors also are on our list of industries struggling the most with rent this month: construction, real estate, and retail.
Beyond coping with ongoing effects of the COVID Era, several of the industries above are hurting due to inflationary pressures, including gas prices, skyrocketing lumber costs, ongoing restrictions around people who have not been vaccinated yet, and more.
In all, a whopping 40% or more of small businesses in a wide variety of categories couldn’t pay their full June rent in full: Entertainers/Creatives (47%), Travel/Lodging (44%), Transportation (43%), Nonprofits (42%), Construction (41%), Videographers (40%), and Beauty Salons/Barber Shops (40%). Beyond 39% of restaurants that couldn’t afford their rent, 38% of real estate agents are struggling along with 35% of retailers.
Largely due to construction industry pressures and other inflationary trends, real estate agents have steadily trended upward in terms of their inability to pay rent. In April, 26% had trouble, now it’s 38%. Similarly, retailers were down to 31% in April and now have inched back up to 35%.
The rent story is a real nail-biter, especially when you consider another Alignable poll released earlier this month that shows 35% of all small businesses fear they might not make enough revenue this summer to stay afloat into the fall. And that number is even higher for retailers (40%) and restaurants (39%).
So, How Did The States Fare In June?
The states with 40% or more of their small businesses reporting that they didn’t pay June rent include:
- New York (47%), up 7%
- Virginia (47%) up 1%
- Georgia (43%), down 3%.
Other states showing that paying the rent is becoming more challenging include:
- AZ: 38%, up 13%
- NC: 37%, up 5%
- FL: 36%, up 3%
However, in these states, their rent payment rates remained the same or improved, showing more of an early recovery. The most striking statistics were uncovered in Michigan, Colorado, and Ohio.
- PA: 36% (same as May)
- CA: 36%, down 2%
- NJ: 36%, down 2%
- WA: 33%, down 1%
- MD: 32%, down 4%
- TX: 32%, down 1%
- IL: 31%, down 6%
- MI: 30%, down 17%
- OH: 26%, down 13%
- CO: 20%, down 15%
For more information on the states, specifically, or more general insights about Alignable’s June Rent Poll, please contact me at chuck@alignable.com.
To see other polls we’ve conducted since March 2020, please go to the Alignable Research Center.
ABOUT THE ALIGNABLE RESEARCH CENTER
Alignable is the largest online referral network for small businesses with over 6.5 million members across North America.
We established our research center in early March 2020, to track and report the impact of the Coronavirus on small businesses, and to monitor recovery efforts, informing the media, policymakers, and our members.
Comments (21-30)
Capitalism<>Greed
The basics of Capitalism is Supply and Demand. We have entered the period of unrestrained desire. The "you can have it all" philosophy has driven the econmy to the edge of collapse. When everyone practices exuberance the forecast is always pestilence.
I was blessed to have been born after the Great Depression and early enough that I may not have to endure a greater depression.
Why are you commenting about minority owned businesses? How about businesses in general. We are all together in this.
It seems to me that government is particularly crappy at assisting small businesses at startup, and when actually small. And I would venture a guess that those struggling most are mostly the very small business.
The PPP money was an application - so my guess again is that the government made it either confusing, difficult, or had requirements that the very small business would struggle with. So why not in-community door to door outreach? Why not solve it at the street level? There's plenty of local government, much of it inefficient and ineffective, sitting in their offices. Put them on the street just like companies do sales people. Incentivize them to help the bottom 100 small businesses on their respective lists.
As for the SBA, it doesn't really exist to help small business, it exists to help small to mid sized businesses that employ 50, 100, 500 where the "partner bank" can make a profit from the business activity. And I do understand businesses must make a profit, but last time I checked, none of the banks are struggling, and the SBA shouldn't be a profit center for banks, it should be their community service.
Small businesses are risky a high percent of the time anyway. It's tough, but giving them money is rarely the answer. Often they'll be back in the same shape when that money runs out. Maybe they can find a course or a mentor to help them with their business marketing and/or management skills.
This really just shows that the long-term impact of the last two years still remains to be seen. It's still as important as ever for businesses to work together and understand we aren't fully out of the woods yet!
The Belgian Congo has a long and storied history of imperialism, genocide and atrocities, marked by slavery and other economic exploitation. But that doesn't make YOU a bad person. But it does mean, like a lot of us, you didn't grown up with the same problems as minorities. What you left out of your rant speaks louder than what you put in. Minority businesses are not suffering because they weren't taught the values you talked about, they've always had different problems. But that doesn't make THEM bad. Things are getting better, hang in there all.
Maybe a good idea would be to create a website/app similar to Air B&B where owners of vacant or underutilized properties could match up to businesses looking for space? Around Orlando I see tons of such buildings. Even many churches are struggling these days and some have empty meeting rooms or halls that are rarely used. Just think, a struggling church or landlord could mutually benefit a struggling business!
Tom you said a mouthful, I'm so tired of the stereotyping, everyone is struggling, it doesn't matter who or what you are, things are difficult right now. I don't like or appreciate hearing or reading about statistics I wasn't even asked about. It's bad enough I have to see and hear the News Media trying to alienate everyone I don't want to read it hear to. Everyone and I mean Everyone needs to work together to get our Business back on track.
The story omits a lot of possibly relevant information. For example, types of businesses, pre-pandemic capitalization and profitability, years in business and so on. Identifying the specific minorities with financial stress may not make people comfortable but not all minorities are the same, so if some minorities fare better in recovery, we should know the why and how. I know many small business people, not necessarily minorities or women, having great difficulty recovering from the pandemic shutdown (s) because they didn't plan adequately for the pandemic or its aftermath and/or had poor balance sheets. Some closed their eyes hoping the pandemic would be over faster and we all know how that turned out. Looking forward, the businesses that failed are a tragedy but one that we can learn from. Studying those businesses that survived can also teach us what to do to prepare for the next pandemic or other adversity including that imposed by inept government.
Always got to make it about race.