Alignable’s January Rent Report is out today and shows that 37% of small business owners were unable to pay their rent in full and on time, indicating ongoing economic struggle across many industries and states. Compared to this time last year, when the rent delinquency rate was seven percentage points lower at just 30%, 2024 is off to a rocky start for the U.S. small business economy.
Despite recent government reports of a “sunny,” stronger economy and lower inflation rates, most small business owners (58%) said they have yet to feel the positive effects of cooling inflation. Noting that the damage caused by inflation is cumulative for them, 75% also say that the cost of supplies is higher now than it was a year ago. For 19%, supply costs are over 25% higher.This report is based on responses from 6,101 randomly selected small business owners surveyed from 1/1/24 to 1/30/24, as well as input from 100,000+ other respondents over the past two years. Here are additional highlights:
- New Wave Of Rent Spikes: 52% of SMB owners say the cost of rent has escalated significantly compared to what they had to pay six months ago, with 14% facing rent expenses that are more than 20% higher.
- Revenue Decline: 63% of SMB owners reported lower Q4 2023 earnings compared to Q4 2022 – five percentage points worse than what they predicted in November. Among this group, 44% earned half or less than in Q4 2022.
- Tech Sector Hit Hard: Small, independent science and technology companies topped the chart of industries having the hardest time covering January rent. In fact, 50% of small tech firms couldn’t pay their rent in full and on time, up five percentage points from December. Survey comments noted that major rounds of Big Tech layoffs have hurt smaller players, many of whom depend on projects and yearly contracts from larger companies.
- Retailers & Restaurants See More Trouble: 41% of independent retailers (up seven percentage points from 34% in December) and 39% of restaurants (up three percentage points) couldn’t cover January rent.
- Still-High Interest Rates Enhance Suffering: 53% of SMB owners say current interest rates are harming them, eroding margins, reducing consumer spending in their Main Street stores, and hindering loan payments or their ability to land new loans.
- Recovery Delayed: 40% of SMB owners say that economic recovery is impossible until interest rates drop by at least three percentage points.
- Labor Costs Rise: 54% said the cost of new hires has escalated over the past year, with 11% noting that they’re forced to pay new hires at least 25% more than a year ago.
- State Disparities: While Illinois, Colorado, and Michigan show major improvements in their SMB rent delinquency rates, small businesses in Pennsylvania, Texas, and Massachusetts are experiencing increased rent troubles.
