Rent Struggles Decline Significantly For Minority-Owned Businesses

TREND TRACKER | DATA INSIGHTS | Boston, MA: April 28, 2022: Alignable's April Rent Report, released today, shows that for the first time since the pandemic started, rent delinquency rates for minority-owned small businesses have dropped below 40%, landing at just 36%. More minority business owners (64%) could afford to pay their rent in full and on time in April -- than at any other time over at least the past two years.

This represents a 10% increase in minority business owners making their rent compared with February, when the rent delinquency rate was 46%. This data is based on a survey of 2,279 randomly selected small business owners polled from 3/31/22 to 4/27/22.

And this rebound is even more dramatic when examining statistics from this time last year, when 54% of minority small business owners polled couldn't afford to pay their rent -- due to ongoing COVID issues/restrictions, inflation, the broken supply chain, the labor shortage, and other hurdles.

Contrasted with April 2021, there's an improvement of 18% in the rent delinquency rate -- a true milestone for minority-owned small businesses and a testament to their incredible resourcefulness and resilience, in overcoming countless obstacles.

This is the first solid sign of recovery among minority businesses that we've seen through our polling of more than 675,000 small business owners during the pandemic era. We hope to see more good news in May.

Smaller Lift Occurs Among Other Groups, Too

While the general, North American rate of small business rent delinquency has remained consistent at 28% for the past few months, there has been some improvement across other groups, as well. But nothing quite as dramatic as the strides made by minority small business owners.

Based on these charts, which cover input from 25,000+ poll-takers, women-owned small businesses improved their rent delinquency rate by 3% since February, returning to January's figure.

And veterans jumped eight percentage points in the right direction, working around a more challenging February to arrive back at their best pandemic-era rent delinquency rate first achieved in January.

Even nonminority-owned businesses fared a bit better this month with a rate of 27% vs. 28% in February.

Is The News As Rosey Reviewing The Latest Industry Data?

Unfortunately, the answer to that question is "no."

Several industries saw rent delinquency rate increases as more SMBs are grappling with the cumulative effects of stifling inflation, reduced consumer spending, and spikes in both gas prices and rent.

In fact, overall, 46% of renters polled said their rent was higher now than it was six months ago. Another 7% said their landlords are planning to raise their rent soon, too.

Industries that have higher rent delinquency rates include:

• art/entertainment (59% couldn't pay their April rent, representing a 31% increase in delinquency)
• event planning & management (50% couldn't afford their rent: a 23% jump in the wrong direction)
• travel/lodging/hospitality (41% couldn't pay, up 7% from Feb.)
• retailers (34%, up 6%)
• massage therapists (33%, up 8%)
• restaurants (33%, up 5%)
  
• construction (33%, up 4%).

Some Hopeful Industry Movement

Beauty salon owners, who've been at the center of the rent delinquency issues for the past two years, are in better shape in April, with their delinquency rate at 40% (down 3% from Feb.).

Veterinarians and pet shelter owners made a big turnaround in April, as their rent delinquency rates dropped from 45% to 26%.

Similarly, 85% of small business owners in the automotive industry paid their April rent in full and on time, leaving a delinquency rate of just 15% (down 13% from 28%).

And manufacturers also had a good month, as 90% paid their rent, up from just 82% in Feb.

Rent Payment Rates Shifted Across States & Provinces Alike

Ontario has the least challenging delinquency rate at just 33% (down 8% from 38% in Feb.), whereas the rate for small businesses in British Columbia is 41% (up 12% from 29% in Feb.), and Alberta tops the charts at 47% in April (up 3% from 44% in Feb.).

Looking at the U.S., there has been some encouraging improvement in:

• New York (only 24% of SMBs are delinquent, down 12% from 36%)
• Texas (20% delinquency, down 11% from 31%)
• Massachusetts (21%, down 5%)
• Florida (24%, down 4%)
• Michigan (30%, down 3%)
• Georgia (30%, down 1%).

Backsliding For NJ, IL, MD, & CA

In April, small business owners in New Jersey, Illinois, Maryland and California had more rent challenges than they had earlier this year.  New Jersey's small business owners saw the biggest increase in rent delinquency, almost matching their rate from October 2021.

• New Jersey (37% of SMBs suffered from rent delinquency, up 16% from Feb.)
• Illinois (34%, jumping 11% from just 23%)
• Maryland (33%, with 6% more delinquency since Feb.)
• California (31%, up 1%).
  

If you want more industry or state/provincial statistics, or the methodology behind our polls, please reach out to me at chuck@alignable.com.

ABOUT THE ALIGNABLE RESEARCH CENTER

Alignable is the largest online referral network for small businesses with 7 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.