This study investigates the impact of rising commercial rental costs on the sustainability of small businesses in urban Tanzania, with a particular focus on the mediating role of coping strategies and the moderating influence of the policy environment. Using a cross-sectional survey of 384 small business operators in Dar es Salaam and structural equation modeling (SEM) via AMOS 26, the study found that rental costs exert a significant negative influence on business sustainability. Coping strategies mediate this relationship, as firms adapt through measures such as downsizing, relocation, and informal operations, though often at a cost to long-term viability. The policy environment is found to moderate the relationship between rental costs and business outcomes, with greater resilience observed among firms with access to formal lease agreements, legal protections, and institutional support. Importantly, the results also demonstrate that, reduced business sustainability contributes to adverse social consequence