38% of small businesses say they have only one month or less of cash reserves

Nation – According to Small Business Referral Network Alignable’s December Rent Report and a poll of 3,252 small business owners, many small businesses struggled to pay their rent in December. The rent delinquency remains high at 40%, just one percentage point shy of November’s 41% rate, the record for 2022.

That number, compared to the same report last December is telling. Last December, only 26% of small businesses had rent troubles. Today, the national average is up 14% over last year.

 “Despite a slightly improved inflation rate, the majority of small business owners remain concerned about the cumulative effects of high inflation saying it continues to take a toll on their businesses,” according to a statement by Alignable. “Rising rents and interest rates, plus reduced consumer spending are also impediments to small business success.”

There was some good news in the report, however. The reports states 38% of small businesses say they have only one month or less of cash reserves. That is up 12% from 26% in Dec. 2021. That represents an all-time high for 2022.

Here are a few more highlights of the report:

  • Only 21% of SMBs have fully recovered financially, making as much or more than they did monthly prior to COVID. This is down 22 percentage points from Dec. ‘21, when it was 43%.
  • Retailers, restaurants and construction companies broke rent delinquency records for 2022 this month, unable to pay their full rent; 46% of Mom & Pop retailers (up 2%), 52% of restaurateurs (up 10%) and 43% in construction (up 1%)
  • 52% of all SMBs say their rent is higher than it was six months ago
  • 64% say consumer spending is down this month compared to Nov.
  • 76% say they’re worried about rising interest rates hurting their business growth, with 41% being “highly concerned”
  • New York leads the pack of states that broke rent delinquency records in Dec., with 55% unable to cover rent in full. Texas at 45% & Florida at 41% also broke state delinquency records for 2022.
  • In Canada, there was some good news. Like the U.S., 40% couldn’t pay their Dec. rent, but that was a five percentage point improvement over Nov. for Canadian small businesses. However, 54% of BC-based small businesses couldn’t pay Dec. rent.

To see the full report, go here. 

Image by pressfoto on Freepik.

Ron Moses is the managing editor of the Upper Cumberland Business Journal and can be reached via email. Send an email.

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