Survey: Over One-Third of Small Businesses Could Not Pay Rent in October

Over one-third of U.S. small business owners could not pay their rent in full or on time in October.

Rent delinquency was already at a six-month low at 30 percent in September, but that figure has now increased by seven points to 37 percent, according to small business referral network Alignable.

Small business owners taking the survey attributed high delinquency rates to increasing rent prices, inflation, recessionary fears, high gas prices, supply chain issues, and labor expenses.

Furthermore, 59 percent of small businesses observed that consumers are spending less.

Across different small business sectors, 49 percent of restaurant owners said they could not pay rent in October, compared to 36 percent who struggled the month before. Restaurants reported seeing fewer customers eat out due to declining disposable income.

Other sectors with high rates of rent delinquency in October include education at 57 percent, auto at 49 percent, transportation at 46 percent, and retail at 43 percent.

For auto companies, failure to pay rent increased by 21 points from September to October. Small business owners attribute this to the supply chain crisis increasing the price of metals and products, combined with a scarcity of inventory. Consumers are also hesitant to purchase vehicles during recessionary times.

Small businesses in seven different states said they failed to pay rent in full or on time, including Massachusetts at 51 percent, New Jersey at 49 percent, New York at 45 percent, California at 44 percent, Pennsylvania at 44 percent, Florida at 39 percent, and Texas at 38 percent.

However, in some states, rent delinquency went decreased from the previous month, such as Illinois and Ohio — going down seven and nine points, respectively.

The survey results were based on a poll of 4,789 small business owners from October 15 to October 27 conducted by Alignable.

Overall inflation has surged under the Biden administration, climbing 8.2 percent since last year, while economists warn that a recession may loom within the next year as the Federal Reserve is expected to increase interest rates several more times and then keep rates elevated throughout next year.

You can follow Ethan Letkeman on Twitter at @EthanLetkeman.