MBN USA
January 04, 2022
More help needed for disadvantaged businesses, communities
While several small business sectors showed strong signs of recovery over the
past month, unfortunately, 43% of
minority-owned SMBs still struggled to pay their rent in full and on time
in December. This finding is based on Alignable's Monthly
Rent Poll of 5,818 small business owners surveyed between
12/4/21 and 12/26/21.
Alignable's December Road To Recovery Report, released earlier this week, showed revenue increases for many small businesses, as they end yet another year tackling the challenges of a global pandemic. More than four out of ten (43%) of small businesses reported achieving pre-COVID levels of monthly revenue, demonstrating that they have fully recovered from the financial effects of the pandemic. Even more impressive, this represented a jump of 16% over the 27% of SMBs that had fully recovered in November. And many of those figures are supported by Alignable's December Rent Report, released today, which shows that only 26% of all SMBs suffered from rent problems in December. That's the lowest monthly level of small business rent delinquency reported since the pandemic began.
Solid improvement in rent issues overall
That 26% figure represents a 9% improvement over the 35% of small businesses unable to pay rent in November. While it should be noted that the 43% statistic from minority business owners reflects a 6% improvement over November's figure of 49%, it still points to an ongoing lack of support for disadvantaged businesses. Since the pandemic began, those business owners have told us how much they have struggled to receive PPP funding and any other the help required to overcome the negative effects of the pandemic.
Women-owned businesses still struggle, too
Beyond minority-owned businesses, small enterprises owned by women have also encountered more barriers along the way and it's telling to see that a larger percentage of businesses owned by minorities or women (or both), consistently have more rent challenges. One quick look at these charts below shows that nonminority-owned businesses and veteran-owned businesses have experienced lower than average rent payment issues in December, while minority-owned and women-owned businesses have a higher percentage of problems than the national average. Despite some improvement from November to December, it's clear more work needs to be done to help level the playing field for minority-owned and women-owned small businesses.
Retailers had their best month yet paying rent
During Q4 of most years, all eyes are on retailer and consumer spending habits. And the increase in consumer spending at local retailers over the past month certainly reflected positively in Alignable's December Rent Report. In November, 40% of small retailers told us they couldn't make rent, but in December, that number dropped by 15% to just 25% -- an all-time low for retailers in the pandemic. The chart below shows a few other industries that had fewer rent issues, as well, in December.
Beyond retailers, other industries that demonstrated double-digit improvement in their rent situations include automotive (car dealers, repair shops, etc. -- down 17%), travel/lodging (also down 17%), and beauty salons (down 19%). It also was nice to see some improvement among construction companies (down 9%), restaurants (down 4%) and event planners (down 5%), but in all of these cases, new measures to combat Omicron surges could hamper or reverse these trends soon.
Some omicron effects are already emerging
As one early example, the increase in rent problems among massage therapists (up 7%) show that consumer fears over Omicron are already impacting categories that depend upon in-person contact. High-touch, personal services industries like message therapy are very vulnerable any time a new variant appears, as consumers tend to back away from these "non-essential" activities first. Several owners of personal services companies also have commented that many customers have canceled their appointments over the past couple of weeks.
Now, let's look at the states
Based on our poll, the only two states that did not witness an improvement in small business rent delinquency in December were Michigan and Massachusetts. Michigan's rent issues increased to 37% from 36%, and Massachusetts saw a similar lift, to 32% from 31% in November.
Other states including New York, which usually vies for the top spot on the list of states with the most rent-troubled small businesses, saw a dip of 14% between November and December, which is remarkable. No doubt, New York businesses benefited from a surge in holiday consumer traffic prior to Omicron-inspired changes. Unfortunately, it's fair to predict that New York's rent outlook among small businesses in January likely won't be as rosy. Other states that saw some vast improvements in the SMB rent situation included: Maryland (down 18% to 23%), Florida (down 9% to 21%), Illinois (down 9% to 27%), and Texas (down 7% to 23%). Smaller moves in the right direction appeared in New Jersey (down 5% to 23%), California (down 4% to 27%), and Georgia (down 3% to 28%).
So, how has Canada been affected?
While 33% of Canadian small businesses say they were not able to pay December's rent on time and in full (7% higher than their counterparts in the U.S.), they actually experienced an even more significant improvement in December. In November, almost half of all Canadian small businesses couldn't pay their rent (47%), but that number decreased by 14 percentage points to land at 33% in December. The U.S. average only improved by 9 percentage points in the same month-over-month comparison.
Our data showed similar improvements in key provinces, as well:
- 44% of AB-based small businesses couldn't pay November rent, but that figure decreased by 10% in December, landing at 34%.
- BC-based small businesses were even more successful in paying December's rent -- as only 32% couldn't afford it in December vs. 45% in November (a 13% improvement).
- ON-based small
businesses saw the most improvement of all, as only 33% couldn't pay December
rent, down from 47% in November (a 14% decrease).
While we hope to see continued improvement on this front, with
the Omicron phenomenon becoming more prominent, we're expecting January's rent
report to be less optimistic.
ABOUT THE ALIGNABLE RESEARCH CENTER
Alignable is the largest online referral network for small businesses with 7 million-plus 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.
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