For the first time in three months, rent delinquency among small businesses in the U.S. increased – by 2% to 28%, after being steady (and at an all-time COVID-era low of 26%) since December. That’s according to Alignable’s February Rent Report released Feb. 28, based on responses from 6,104 small business owners surveyed from Feb. 19 to Feb. 27.
At the same time, minority-owned businesses also suffered more rent problems, as 46% of them reported being unable to pay their rent in full and on time in February (up 2% from January and up 3% from December).
And animal hospitals/shelters, along with alternative healers, were seeing some recovery in their rent problems last month. But this month, their delinquency rates shot back up.
Meanwhile, the total percentage of businesses reporting that they have fully recovered is down 1% from last month and down 14% from December, continuing an ongoing decline. The reasons for the recovery reversal – and the increase in rent delinquency – are attributed to a combination of skyrocketing inflation (including higher rent prices), the still-broken supply chain, and ongoing effects from omicron, though cases continue to decline.
Rent backslides for all groups
Women-owned businesses jumped 3% from 27% to 30% this month. Veterans, who were seeing a few months of recovery, suffered an 8% increase in rent problems from January to February.
Restaurants and retailers bounce back, but others slip
Despite more rent delinquency this month, there has been some good news. Restaurants and retailers, two groups that have struggled throughout the pandemic, saw a nice decline in rent issues from January to February.
Restaurants saw an 11% improvement in their rent delinquency. Restaurants have been on a rent roller coaster ride for many months.
And, as of this month, it looks like retailers are rebounding, with 5% more of them able to pay their rent in full and on time.
Manufacturers also had a 15% lift in the right direction, bringing them to their all-time, pandemic-era low for rent issues.
Negative news for travel, healers and vets
It’s a little discouraging, but not surprising, to see that SMBs in the travel/lodging space are having a harder time paying their rent this month. Now, 34% of those business owners couldn’t pay their February rent, up 6% from January.
Travel owners say past and potential clients are still having trouble commiting to new trips, that they just canceled a month or two ago because of omicron.
Three other industries continue to struggle: Animal hospitals/shelters, beauty salons and alternative/holistic healers.
Statistics for the animal hospitals jumped in the wrong direction by 19%, and the alternative/holistic healers really had a rough month: 23% more of them couldn’t pay their rent in full and on time.
Then you have beauty salons, which were devastated by COVID early in the pandemic. After seeing a nice rebound in December, they have gradually had more trouble paying rent, with 43% of them unable to cover their February rent.
Ongoing supply chain issues are interfering with those industries’ ability to get all of the products they want. Inflation (and rising rent prices) are taking a toll on them, too.
The same goes for small businesses in the automotive industry, which saw a 7% spike in rent struggles this month.