For the second month in a row, the number of SMBs delinquent on their rent hovered around 40 percent. According to Alignable’s December Rent Report, 38 percent of small businesses “say they have only one month or less of cash reserves right now,” which is up 12 percentage points “from just 26 percent in December 2021 and represents an all-time high for 2022.”
The report also revealed that just 21 percent of polled SMBs have recovered financially to pre-pandemic levels. “This is down 22 percentage points from December 2021, when it was 43 percent,” the report stated. Still, the report’s author said, “retailers, restaurants and construction companies broke rent delinquency records for 2022 this month, unable to pay their full rent.”
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By state, Alignable said New York had the highest rent delinquency rate, with 55 percent of respondents saying they cannot cover rent in full. Texas came in with 45 percent, while Florida was 41 percent.
The survey also showed that 52 percent of all SMBs said their rent is higher than six months ago. And 64 percent say consumer spending is down versus November. Meanwhile, 76 percent of those polled said they are worried about the impact of rising interest rates on their business — with 41 percent describing being highly concerned.
The Alignable survey reveals the challenges SMBs face in the new year. A pullback in consumer spending due to inflation is expected to continue through the first half. SMBs are also facing workforce shortages and tighter cash flow, as well as supply chain glitches. But it is the uncertainties of several variables that have SMBs in a spin.
When asked about the top three challenges facing their business, 38 respondents in an SMB Group poll said it was dealing with ongoing uncertainty and changing market conditions. And 34 percent said it was sustaining revenues, while 33 percent said it was in attracting new customers.