When Small Businesses Can’t Pay the Rent
A recent poll from Alignable revealed an interesting trend: we’re currently seeing the lowest rent delinquency rate since April 2022 for small businesses, coming in at 30 percent. To put this into perspective, the rate was 40 percent in August of this year. The poll consisted of over 4,200 small businesses across the United States from 9/16/22 to 9/29/22.
Why are folks unable to pay their rent? The first thing that comes to mind is rent increases. Of those who participated in the August Alignable poll, 45 percent noted their rent is at least 50 percent higher today than prior to the pandemic; 24 percent noted their rent is at least two times as high, and 12 percent said it was three times as high. There are other factors at play as well, including increased prices for gas, supplies, and labor; higher interest rates; and lower consumer spending. Interestingly enough, the poll also revealed which types of small businesses are seeing the highest rates of rent delinquency–with small businesses in agriculture, nonprofits, and restaurants coming in at the top.
We’d anticipate that with the pandemic slowly creeping into the rearview mirror and customers heading back out to stores and restaurants, profits would be rising and the ability to pay rent wouldn’t be as difficult. While we’re definitely seeing improvements in the trend, a 30 percent delinquency rate is still higher than we’d like. While customers are coming back, it’s not to the levels we were at pre-pandemic. And with inflation on the rise and fears of a recession, small businesses continue to struggle.
Another factor to consider is that for the better part of a year and a half, landlords were going easy on renters, making sacrifices for themselves in order to keep their clients. Now, they are tightening the reins and demanding tenants pay up–or move out. Patience, as they say, is running thin. We’ve got to remember that landlords have mortgages to pay, and they use their rent income to do so.
With the right strategy, small businesses can be resilient. Those who have finally decided to raise prices. Fifty-nine percent of businesses in the poll noted they are charging more for their goods and services, and 14 percent of those businesses are charging 25 percent more than they did before the pandemic. It was a “raise prices or lose the business” situation, for many. Gas prices are also finally starting to ease, which leaves business owners with more money to spend on the necessary things–like rent.
There might be times in the lifespan of your small business that you just can’t seem to pay the bills. ARF Financial offers working capital loans to help you weather situations just like this. We can provide the funding your business needs quickly, without the long wait of a traditional bank loan or any hidden fees and payment surprises. And our approval process? It’s streamlined, requires minimal documentation, and you can get funded in just a few days. Interested in learning more? Stop by today to see how a working capital loan from ARF Financial could be just the thing your small business needs.