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 (1-10)
Very sad! It is too bad that there are "HIRING" signs EVERYWHERE but so many are choosing NOT to work. This lack of workers is creating a domino effect and causing so much divide! We are very fortunate to be a family owned business and have 2 of our sons working for us as well as 2 other very hard working young men.
So, I recently had the misfortune of spending a week in a city in AZ. The hotel was so short staffed room service was only available on request and the restaurant was only open for dinner because they only had two people working each day. Every store I tried to go to had a help wanted sign and a few places were closed because they had no employees willing to come back (their signage indicated such). Then at my hotel, locals flooded the place to use the pool and A/C (don't blame them, as this Alaska girl was melting in 100 degree plus). That being said, many openly bragged that they were using their enhanced unemployment benefits to pay for it. In fact, one local actually told the staff doing maintenance and cleaning of the pool that he was "a tool" for working since he'd make more money staying home.
A complete load of nonsense. Ive been in business continually since 1973. I have lived through three major economic catastrophes. 1977, they told us there was not a drop of oil left in the ground, we used it all up. Once gas prices went over a dollar, boom, oil was everywhere. 1991, a complete economic turn down due mostly to the rising energy costs because they found oil but it was in the middle East. Kuwait gets invaded, we run out of oil, again. Also in 1991 the criminal banking institutions decided to cut back on credit and raised interest rates to counter inflation which was actually just the oil greed. 2007, oh boy, England wanted to get paid back for covering the insurance costs of Katrina, so a banking and insurance crisis. The crisis was so bad that Chase bank bought up all the small banks and put one of their branches on every corner. Now this new Covid one is a beauty. The government put a moratorium on evictions so why pay rent? This hurts the landlords who will eventually lose their properties to the banks or a corporate limited partnership and there goes the neighborhood.
This is effecting non minority small businesses just as much. I don't know why we have to separate this. Small businesses are hurting period. American small businesses. We are all Americans. I can tell you it's across the board, I am taking down signs for companies closing. It you want to categorize which small business you should do it by product not race of the owner. Restaurants, CBD shops (which there is still an overwhelming amount), novelty type shops (things people don't really need but buy when there is extra money).
You have to be more creative with your marketing to stand out. You also have to put some real effort in. Door hangers with menus or coupons, 10th one free punch cards, banners, and absolutely do do do advertise on social media some way.
This article does not give one single good reason why minorties are slightly stuggling more. Just a bunch of generic statements that effect everyone. Thsi is nothing more then an article that is disgined to stirr it up.
I think this pandemic showed a lot of people that health f, family and friends are more important and working to survive in the USA isn’t working. I know when I pay good wages I get workers who want to stay and work harder because they feel appreciate. I know it’s hard for small business to afford higher wages but pay one -2 workers with benefits and living wage makes more sense than having a lot of unmotivated cheap labor
I am genuinely saddened by the lack of empathy and compassion shown by this group. Yes it is hard to operate a small business but to say that people who don't want to work for $8 an hour are "lazy" is to misunderstand some basic economic principles. I could go on but why bother.
It truly surprises me that Small Business owner skip rent over other obligations. If you do not have a place to sell from you are out of business. What will you skip next? Your payroll? Priorities need to be set. If you are stuck in a high rent building then downsize. focus on sales the old saying (Sales Cure All ills) is key to keeping alive!
Why is business owner race the reason for failure. I have never gotten assistance or help with my businesses. Bank wanted my money before they give me a loan so I never took a loan. I couldn’t afford a building or space so I went without till I could. I couldn’t afford everything else so I started small and worked 7 days a week 12-18 hr days and still do. I didn’t get here or am successful because I was given aid or my race or gender. I am successful because I did without many things and understood that If I wanted to live I was going to work.
For those that were around in the 1970s you remember $2.15 min hr wages…. When they raised that what happened? When Gov raised it countless time what happened ? When Gov made affordable health I loss my Ins because I can’t afford the affordable care act that killed so means carriers and took rates sky high (pre Obama Health Ins $400 month fir 2 healthy adults now after Obama $1400 for 1 healthy adult is not affordable by anyone).
Again race is not a factor except for the mind set that if minorities fail it’s because Race or some inequality. Education is free through HS but that still hasn’t help people learn or be successful. Gov give free money, free cell phone and free/reduced housing and food still hasn’t help people be be accountable, responsible, law abiding, or productive people. If you don’t make good choices and learn how to be successful your race or gender will not be the reason. I made my way and only I can continue to be successful by working smart and working a lot.
There is no substitute for honest hard work and taking your education plus life experience and making yourself better. YOU are not defined by your race or gender if YOU don’t allow it to be your focus or your reason for failing. We all fail but some of us get back up, learn from your errors and move forward in a positive direction.
How many were surveyed? This just shows percentages. What was the total number surveyed by area? I think I saw 3,814 but is that a national, regional, or local number. Makes a big difference in the perception of the issue.