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Small-Business Bankruptcies Decline in Several Ailing U.S. Areas

While bankruptcy rates remain high across the nation, they declined in 11 of the 15 metropolitan statistical areas with the highest number of small-business bankruptcies, according to a new study.

Rates varied with the types of businesses in each area, according to credit reporting agency Equifax, which conducted the study.

Economic challenges continue to pressure small businesses in many areas and affect the pace of recovery in certain markets.

Analyzing bankruptcy trends among the more than 24 million small businesses in the United States, Equifax found that regions in the West continue to experience economic turbulence, although there was some decrease in bankruptcy rates across select metropolitan statistical areas (MSAs) in California and Texas. Equifax defines a small business as one with fewer than 100 employees.

In economically challenged California, the Los Angeles, San Bernardino and Santa Ana MSAs experienced year-over-year bankruptcy rate increases, with San Bernardino posting the greatest, 10.1 percent, the study said. However, other areas of the state, including San Diego, Oakland and Sacramento, reported double-digit declines in the third quarter of 2010, with Sacramento bankruptcies dropping 13.10 percent.

The variance in rates, Equifax senior vice president Reza Barazesh told BusinessNewsDaily, reflects the concentration and composition of business types in different areas.

“It depends on what kinds of industries are in that MSA,” Barazesh said. “Transportation and construction industries have the highest bankruptcy rate.”

The Atlanta-Sandy Springs-Marietta MSA in Georgia and Chicago-Naperville-Joliet in Illinois saw bankruptcy rate decreases of 26.75 percent and 16.67, respectively.

“Our analysis on small business bankruptcy continues to indicate ongoing uncertainty in today’s marketplace,” he said. “While business bankruptcies have begun to reverse course in some regions, it remains to be seen how small firms will steer through economic headwinds and sustain growth.”

Equifax research also showed that of the 15 metro areas with the fewest small-business bankruptcy filings in the year's third quarter, 10 experienced a decrease in the number of bankruptcy petitions from the previous quarter as well as year-over-year. These MSAs, which reported 11 or fewer bankruptcies during the third quarter, were led by Amarillo, Texas, which posted five bankruptcies in the third quarter, followed by South Bend-Mishawaka, Ind., and Kingsport, Tenn.- Bristol, Va., with six each.

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Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com. Follow him on Twitter @nedbsmith.

Ned Smith

Ned was senior writer at Sweeney Vesty, an international consulting firm, and was Vice President of communications for iQuest Analytics. Before that, he has been a web editor and managed the Internet and intranet sites for Citizens Communications. He began his journalism career as a police reporter with the Roanoke (Va.) Times, and was managing editor of American Way magazine and senior editor of Us. He was a Captain in the U.S. Air Force and has a masters in journalism from the University of Arizona.