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The Epoch Times
The Epoch Times
1 Jul 2023


NextImg:Small Business Owners Nationwide Struggling to Make Rent: Survey

A recent report states that many small business owners are failing to pay rent on time due to rising rental amounts, with sectors like education and manufacturing struggling the most.

Rents rose for the fifth straight month in June for small businesses, according to a June 28 report by the small business network Alignable based on a poll of 4,801 owners. “The situation is so intense that nearly four out of 10 small businesses were unable to pay their June rent in full and on time. This rent delinquency rate is tied with April’s as the highest so far this year—39 percent,” the report said. “55 percent say they’re paying more now than they did six months ago. And 16 percent say their rent is over 20 percent higher than it was in January (up 2 percent from last month).”

“The 55 percent figure represents a steady climb in the number of small businesses dealing with rent spikes—up eight percentage points from 47 percent in January.”

The sector which struggled the most was education, where 55 percent of small and medium businesses (SMB) could not pay rent in June. In the manufacturing sector, this figure was 46 percent, with restaurant owners coming in third place at 45 percent.

The state which saw the highest rent delinquency among small businesses in June was New Jersey, where 48 percent could not pay rent. Florida came second with 46 percent delinquency, and Georgia and Ohio with 44 percent each.

The Alignable report also cited inflation as a major worry for small businesses. “62 percent of SMBs have yet to earn as much revenue monthly as they did prior to COVID, over three years ago. The cumulative effects of higher-than-usual inflation have played a big role in preventing those recoveries,” it states.

As such, small business owners are facing a situation where their revenues are dropping amid rising rents, elevated inflation, increasing interest rates, and other challenges.

The U.S. Chamber of Commerce’s Small Business Index report for Q2 2023, also found that inflation was cited as the biggest challenge for the majority of small business owners (54 percent).

“This has remained consistent since Q3 2022 and represents a 35-percentage point increase since Q3 2021. This sentiment is widespread, and inflation is the top concern for small businesses regardless of their region, number of employees, or sector,” it stated.

Three in four small businesses said that rising interest rates were limiting their ability to raise funds for their businesses. Over half reported having delayed their expansion plans due to the higher rates.

While 74 percent blamed high rates for making it harder to pay back existing business loans, 73 percent said they now find it harder to borrow money from banks as credit lines are being tightened.

“Small business owners also indicate that they are turning to more sources for capital/financing for their business,” the report stated.

“A majority report relying on their personal savings (71 percent), credit cards (67 percent), and local banks or credit unions (59 percent) for funding. Four in 10 (41 percent) small businesses say they have turned to fixed-rate loans while 26 percent say they have used variable-rate loans.”

During a June 7 hearing of the House Committee on Small Business, owners of small businesses blamed the Biden administration for creating a tough situation for them.

Silvia Lee, executive vice president and chief lending officer for First Community Bank in Corpus Christi, Texas, said a commercial customer told her he felt targeted by the administration. “He mentioned that he feels our government doesn’t want small businesses to succeed and only wants large companies in business,” she said.

Lee stated that raising interest rates to rein in inflation has forced many customers of her bank to cut down their business operations.

Another small business owner, David Zittel, a vegetable farmer from New York, said that regulations are raising the cost of doing business and asked Congress to make sure that “laws and regulations do not put us out of business.”

According to data from American Bankruptcy Institute (ABI), small business bankruptcy filings under Subchapter V of Chapter 11 filings rose 31 percent in May 2023 compared to a year back.