Nearly 4 In 10 Small-Business Owners Unable To Make Rent As Costs Soar
Thirty-seven percent of small-business owners were unable to pay their rent in October as inflation chips away at income.
The rate of rent delinquency outpaces the previous month by 7 percentage points and is now at its highest pace so far this year, according to new survey data from Boston-based small-business network Alignable.
More than half of the 4,789 respondents said their rent is at least 10% higher than it was six months ago, according to Wealth Management. Restaurants have been particularly hard-hit, with the rate of rent delinquency climbing from 36% in September to 49% in October.
A growing share of real estate agents, whose business has dried up as climbing mortgage rates keep buyers from buying and sellers from selling, are also struggling to make ends meet, with 37% unable to pay their rent, up from 27% in September.
“The consumers, in general, are doing great,” Danny Perez, founder and managing director of DFW-based M&D Real Estate, said in an Oct. 28 report. “It’s the brokers — people like me — it’s the agents who are having a hard time. We are seeing virtually no transactions, in essence, compared to what we were seeing last year at this time.”
A third of small businesses are at risk of going under if the trend of lost revenue does not reverse in the coming months, according to Alignable’s data.
Seventy percent of small-business owners surveyed by Nationwide Agency Forward last month said they expect a recession in the next six months and more than half are looking for ways to trim expenses. Job cuts are on the table, with 38% reporting a pause on hiring and 23% reporting furloughs or reduced hours.
In an effort to control inflation, the Federal Reserve is expected to raise interest rates again Nov. 2, according to the Center for American Progress. Additional increases could inadvertently reverse the trend of robust job growth — which has thus far buoyed a precarious economy — and create a recession, per the center.