Half Of Small Businesses Haven't Paid Full April Rent Early

Half Of Small Businesses Havent Paid Full April Rent Early Poll Sugg

Half of small businesses in the United States have not paid their full April rent or mortgage, according to a recent survey conducted by Alignable, a social networking platform for small businesses. The survey, which included over 1,000 respondents from small businesses with up to 50 employees across sectors such as retail, restaurant, and auto repair, revealed that approximately 30% of these businesses had made no rent or mortgage payments for April, while 20% had made only partial payments. The remaining half reported paying their full rent on time. Furthermore, only about 25% of respondents indicated that their landlords or lenders offered reductions or deferrals on payments amidst the ongoing coronavirus crisis.

The findings highlight the severe financial strain small businesses are experiencing during the pandemic, with many struggling to meet their rent obligations. The survey underscores an urgent need for policy interventions to provide liquidity and financial relief to these businesses, which are vital to the U.S. economy, representing about half of employment and an estimated 30 million small enterprises as of 2018 (U.S. Small Business Administration, 2018). Small business economist Michael Feroli emphasized the critical importance of swift policy responses to prevent a cascade of financial failures that could impact landlords and lenders nationwide (Feroli, 2020).

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The COVID-19 pandemic has profoundly disrupted small businesses across the United States, revealing vulnerabilities in their financial resilience and workforce stability. The recent survey by Alignable reflects the stark reality faced by many small enterprises — uncertainty around rent payments, cash flow shortages, and the potential for widespread closures if financial aid is not delivered swiftly and effectively.

Small businesses are often characterized by limited cash reserves, typically only sustaining operations for 15 days or less in many cases, as noted by JPMorgan’s chief U.S. economist, Michael Feroli (Feroli, 2020). With the pandemic causing a sharp decline in foot traffic, reduced consumer spending, and mandated closures, revenue streams have dried up for many small businesses, making rent payments a significant challenge. The survey’s indication that about 30% of businesses are unable to make any rent payments for April underscores the urgency of emergency financial assistance from government programs.

Indeed, the federal stimulus package, totaling $2.2 trillion, includes provisions aimed at alleviating some of these financial burdens on small businesses. However, delays in disbursement and difficulties in accessing funds, such as SBA disaster loans, have left many owners waiting in limbo. For instance, Jason Wester, owner of a print shop in Michigan, reported that his application for an SBA emergency loan had yet to be approved, creating uncertainty about how his business will survive beyond immediate weeks (Wester, 2020).

The economic fallout extends beyond business owners, affecting millions of residential renters, many of whom are also experiencing difficulty making rent payments. Studies from LeaseLock and Avail have shown an increase in rent delinquencies, with some indicating that late payments are twice as high as normal (LeaseLock, 2020; Avail, 2020). This situation raises concerns about a broader housing crisis, as the expected surge in unemployment — estimated at 701,000 job losses in March alone, the largest since the recession — further reduces household incomes (Bureau of Labor Statistics, 2020).

Government responses to evictions include moratoriums enacted in several cities and states, such as San Francisco, Los Angeles, Oregon, and New York. These measures aim to prevent immediate displacement; however, they do not address underlying financial hardships or prevent rent accumulation that could lead to eviction once these moratoriums expire (National Alliance of Housing Advocates, 2020). The long-term implications are uncertain, with some small business owners fearing that reduced consumer spending in subsequent months could further impair their ability to sustain operations and service debts.

Understanding the financial struggles and operational challenges faced by small businesses during this unprecedented crisis is crucial. Their stability is directly linked to the broader economic recovery, employment levels, and housing security across the country. The pandemic has underscored the need for robust, targeted policy measures to provide immediate relief and support sustainable recovery frameworks for these vital economic engines.

In conclusion, the recent survey emphasizes the critical financial distress affecting small businesses, with significant implications for landlords, lenders, and the housing market. Effective policy responses and streamlined aid distribution are essential to prevent further economic deterioration, safeguard livelihoods, and ensure the resilience of the small business sector amidst ongoing uncertainties.

References

• Bureau of Labor Statistics. (2020). The Employment Situation — March 2020. U.S. Department of Labor. https://www.bls.gov/news.release/empsit.nr0.htm
• Feroli, M. (2020). The Crisis Facing Small Businesses and the Need for Policy Action. JPMorgan Chase & Co. https://www.jpmorganchase.com/corporate/news/stories
• LeaseLock. (2020). Rental Payment Data During COVID-19 Pandemic. LeaseLock Research Report.
• National Alliance of Housing Advocates. (2020). State and City Moratoriums on Evictions During COVID-19. NAHA Publications.
• U.S. Small Business Administration. (2018). Small Business Profile. https://www.sba.gov/advocacy/small-business-profiles
• Avail. (2020). Impact of COVID-19 on Rental Delinquencies. https://www.avail.co/education/covid19-rent-data
• Wester, J. (2020). Personal communication about SBA loan application. Unpublished interview.
• Womply. (2018). Small Business Cash Flow and Survival. Womply Survey Results.