Alignable: Recovery Backslide: 49% of Minorities ( up 9%) & 40% of Retailers (up 7%) Can't Afford To Pay Nov. Rent

RENT REPORT | TREND TRACKER | DATA INSIGHTS -- Boston, MA, November 16, 2021:  Halfway through Q4, Alignable's November Rent Report reveals that rent problems are worsening among small businesses across the U.S., just when many hoped for some sort of significant holiday shopping rebound. And expectations from SMBs for the next 30 days don't look too promising, either.  

Released today,  the report, based on 3,454 small businesses polled from 10/30/21 to 11/15/21, shows that 35% of all small businesses in the U.S. could not pay their rent in full and on time in November, up 3% since last month and up 5% since August.

The struggle is even worse for minority-owned businesses, as nearly half of those polled (49%) can't afford November rent (a 9% increase over October).

And despite the fact that the holiday shopping season is gearing up quickly, 40% of retailers now are falling behind on their rent (a jump of 7% since last month). 

And we're seeing that veterans are having more trouble paying the rent, along with 44% of small businesses in New York (up 5%).

More Minorities & Veterans Can't Pay Their November Rent

As the charts below reveal, rent problems have increased for another 9% of veteran-owned businesses in November, compared to 26% who couldn't pay October rent.

Alignable graph on demographics for Nov. rent poll
Alignable chart on minorities and veterans for 11/21 rent poll

Women-owned businesses and nonminority-owned firms also saw 2% increases in rent delinquency, but those are relatively minor compared to what we're hearing from minorities and veterans.

In a related November poll, we also learned that 73% of veterans said they believe national policymakers should be doing more to help boost their recoveries, including passing better laws, increasing federal funding, and reducing taxes for small business owners.

Beyond that, our findings showed that 77% of veterans say they have yet to fully recover, along with 85% of minority-owned businesses. Both of these statistics should give policymakers pause, and encourage some rapid action.

Based on these polls, and past surveys over the last 21 months, disadvantaged groups including minorities and veterans yet again are not receiving enough support to get through the ongoing pandemic and COVID aftershocks like the broken supply chain and record-breaking inflation.

Something really needs to change here or next month's statistics could be even worse.

Rent Troubles Escalate For Retailers, Auto Dealers & Hotels

Minorities and veterans aren't the only ones in the small business universe having major trouble with their economic recoveries.  Diving deep into the industry landscape, Alignable's November Rent Report uncovered that the automotive industry and retailers saw major increases in rent issues this month.  Here are the key insights by sector:


Given the broken supply chain, it's no surprise to see that auto dealers and repair shops are having revenue issues -- with nearly half of them (48%) reporting they couldn't make rent this month.

The cost of metal and the scarcity of parts for a variety of car brands adds up to a very challenging situation.  Here are quotes from industry representatives that pinpoint their everyday issues:

“I run a car dealership, but I can’t get any vehicles to sell.”

“The supply chain is not functioning. We have long waits for parts, etc.”

"Some of our customers are really losing patience."

And the statistics behind the rent issues for small businesses in the automotive sector show just how quickly the problem has spiraled. Just look at that jump from 30% last month to 48% this month, representing an 18% decline:

Similarly, you can see how the escalating prices of vital supplies -- like lumber and gas -- have affected 44% of small business owners of construction companies (up 2%), 43% of the travel agents and hoteliers (up 4%), and 41% of small businesses in the transportation sector (up 5%).

Shop Local & As Often As You Can

And then we have the retailers, who in more normal years, would likely be in much better shape to pay their rent (and any other expenses). 

But given their struggles to access the goods they need to sell, the labor shortage they've endured for half a year, and the increases in inventory prices for the items they can actually source, they're in a rather desperate predicament right now. Even worse, 48% say they're uncomfortable passing on the elevated cost of goods to their customers, which further impedes their recovery and their ability to cover rent.

In fact, 40% of small, local retailers could not afford to pay their rent in full and on time this month, a jump of 7% since last month.

And according to Alignable's November Road To Recovery Report released just last week, times are even more challenging for 26% of retailers, who fear financial failure in Q4 unless consumer shopping habits change dramatically. 

Imagine one-quarter of the stores you take for granted now becoming empty storefronts -- that's a strong possibility when you compare what they expect to earn vs. what they feel they need to survive until 2022.  Here are a few quotes from retailers:

"Barely hanging on."

“Politicians need to focus on relieving supply chain problems instead of the rest of the stuff they’re worried about.”

“All costs are going through the roof.”

"Wish I could raise my prices, but I don't want to scare off the handful of customers I see everyday."

So, as much as we had hoped for a major retail rebound this season, so far that doesn't appear to be happening. In fact, our related poll on different industries' recovery rates shows that 76% of retailers have yet to recover, earning the same monthly revenue levels they generated prior to COVID. That means only 23% of retailers right now are in great shape. 

Considering these findings, consumers who want to preserve their quaint downtowns and keep their retailers in business need to act soon, by avoiding purchases from online behemoths and heading right to their Main Street merchants. Those hometown retailers need all of the support they can get now. Consumers deciding to join movements like #shoplocal and/or #onemainstreet can make a difference for some merchants, before it's too late.

However, on a positive note, while 38% of restaurants are still having trouble paying their rent in November, at least that figure is a tad lower than it was last month (improving by 3%). Anyone eating locally should keep it up, too.

What's New In Key States? Sorry, NY's In Trouble, Again

When you look at the November rent situation among different states, you can see how the overall picture is becoming more gloomy in many areas, as the damaging effects of inflation spread.  But there are a few bright spots, too.

New York was seeing some recovery in terms of the rent situation, that is, until November. Michigan stole top honors for a couple of months as the state with the most widespread small business rent troubles. But New York is back on top with 44% of small businesses saying they couldn't pay November rent.  That's an increase of 5% over October.

Here's what the rest of the situation looks like:


Beyond New York, Maryland, which was faring relatively well with its small business rent issues, catapulted 15 percentage points this month. Some 41% of its SMBs couldn't handle November rent.

And the same could be said of Illinois, which was also at 26% last month. But now 36% of Illinois businesses can't cover rent (up 10% over October). Others that saw increases in rent struggles among small businesses included California (31%, up 2%) and Florida (30%, up 3%).

States where rent problems eased among their small businesses included New Jersey (28%, down 10%), Massachusetts (31%, down 6%), and Michigan (36%, down 6%). Georgia had no change from month to month and is at 31%.

For more information about different states or more details related to this report, please contact me at chuck@alignable.com. To see other polls we’ve conducted since March 2020, or past rent reports, 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.


14 Comments 4.2k Views

Comments (1-10)

This is bad news for everyone. Small business is the backbone of the American economy. So many business owners have been hurt, through no fault of their own, by the pandemic and shutdowns. Flat or declining sales revenue does not appeal to traditional lenders like banks. And they require high personal credit scores. This holiday season, please shop at and support local small businesses.

Yes Dan, let's all support local businesses. Maybe this holiday we can give gift certificates from  local businesses instead of giving gift cards from Amazon or itunes etc. Small restaurants, hair stylists, massage, skin care etc have been hit hard both by Covid precautions and by people having less disposable income.  Another way that you can help small business is to give them 5 star reviews which helps them find more clients in online searches.  (Caution on that: only do a few reviews a week or google thinks you  are a bot and freezes your reviews)

There are some resources to help business owners.  Can I get ERC Funds if I already took the PPP?   Yes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted December 27, 2020, modified the ERC credit rules. One of the modifications included allowing a company to have a PPP loan and still take advantage of the ERC credit. However, you can't use the same dollar for dollar funds. We take this into account when processing your ERC credit.  Businesses can qualify in minutes although receiving the funds does takes weeks. https://ercspecialists.com/?fp...

I would like to add this. Do you really need a store front. I own a commercial printing and signage business and we have come to realize that a store front isn't needed. We moved to a smaller warehouse for the equipment and supplies and do all our design work and paper work from our home office. This has cut our bills in half. Even with offering free local delivery our gas costs is still way under what we would pay for a store front. Something to consider.

Business from Snellville, GA
Commented on Nov 18th, 2021

This is a true fact, I’m one of those retailers whose behind in my commercial rent. Helped family save home from being repo and unfortunately, I got behind with my own responsibilities thinking business would pick up! I’m closing my shop because I have no other recourse nor funds. My heart is broken!

Business from Wichita, KS
Commented on Nov 30th, 2021

Margaret, your response is becoming more common than what should be allowed. When small businesses become causalities in the our communities because of cashflow, there ought to be an alarm that sounds off! Managing cashflow and managing the operations are oil and water for small businesses. When you add in the volatility of customers and their experience, you create a perfect storm of uncontrollable circumstances. I want to share that I help and guide small businesses in obtaining business credit and financing on their EIN, so occurrences, like Margaret's, can find favorable solutions and outcomes. 

Very interesting stats. Real Estate prices are so high so even buying the buildings they occupy is cost prohibitive. crazy times.

I suggest living with friends and or family until things improve or change.  

These are quite possibly no recourse loans without guarantees