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Landlords Might Wipe Out a New Wave of Small Businesses

For many business owners, a break on rent could mean the difference between survival and failure.

Main street in Laramie, Wyoming.

Main street in Laramie, Wyoming.

Photographer:GETTY IMAGES

What might extinguish a significant chunk of America’s struggling small businesses in the coming months? Their inability to pay rent. Or really, their inability to get landlords to negotiate on rent. The situation has been under the radar for the general public for since day one of the pandemic but remains an “enormous problem” for local business owners, says Mary Alice Scott, executive director of the Portland Independent Business and Community Alliance in Maine. When businesses closed temporarily, the fell behind on paying rent—most by at least three or four months, says Rolando Gonzalez, a senior staff attorney at the Legal Aid Society’s Community Development Project in New York.  “The problem is, even after they opened back up, their revenues are down.” The rent problem is “only going to get worse," he says.

survey released in August by advocacy group Small Business Majority of more than 900 businesses in its network indicated 62% are struggling to make commercial rent or mortgage payments—up 6% from a previous poll released earlier in the month. The group warned a wave of commercial evictions and foreclosures could be on the horizon. A survey released in September of more than 5,500 business owners by Alignable, a business referral network, showed 32% will be unable to pay full rent on time in September, down from 33% in August. Minority-owned businesses struggled the most with rent, according to the survey.