Two in five small businesses couldn’t pay September rent, according to new poll

Delinquency rate peaks in 2023 as unfavorable circumstances converge for small companies

Forty percent of small-business owners weren’t able to pay their September rents in full and on time — a new peak this year, according to a recent poll from Alignable.

Up one percentage point from August, the slight increase continued a three-month upward trend for small-business rent delinquencies, which crossed the 40% threshold after months of hovering between 37% and 39%. Retailers appear to be suffering the most rent woes, with 47% (a new high for the sector this year) unable to pay their September rents in full and on time. Lodging and travel businesses were next at 45%, followed by restaurants and tech businesses at 44% each.

Notably, the only industry in Alignable’s study that didn’t post an increase in its delinquency rate was automotive, indicating that the United Auto Workers strike hasn’t yet impacted small businesses in the sector.

The high delinquency rate appears to be the product of a perfect storm of unfavorable economic factors for many small businesses. For one thing, rents have risen, with 52% of small-business owners reporting that their rents are higher now than they were six months ago. Fourteen percent said that their rents are at least 20% higher. Gas prices, too, have taken a toll, with 46% saying that higher-than-usual gas prices have held back business growth.

Business in general also appears to be lagging for many small companies. Fifty-three percent of small businesses reported in September that their monthly income is at least 50% less than what they generated prior to the COVID-19 pandemic. That’s up 3 percentage points from August and up 13 percentage points from July. Only 34% of businesses that existed prior to the pandemic indicated that they’ve fully recovered financially.

New businesses are also struggling. Sixty percent of businesses that are one to three years old indicated that they’re making less than half of what they made at this time last year, up seven percentage points from August.

Fifty percent of small-business owners polled by Alignable said that more than a year of rising interest rates have cut into their margins and lowered revenues, as well as making them think twice about taking out loans or planning for growth. Of that group, 38% said that the Federal Reserve will need to lower its anchor rate by at least three points before small businesses can recover.


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