Small Business Bankruptcy Filings Take a Dive

Small business bankruptcy filings dropped in many areas of the U.S. from coast to coast in 2010, according to a new study, with some Western regions experiencing sharp declines. The one exception was California, where economic turmoil remained high last year and accounted for nearly 20 percent of the country’s business failures.

The study, sponsored by credit reporting agency Equifax, analyzed national bankruptcy trends among the nation’s more than 24 million small businesses by metropolitan statistical area (MSA).  It focused on the time frame from the fourth quarter of 2009 to the same quarter last year.

While bankruptcy rates continue to put pressure on geographies across the county, 10 of the top 15 MSAs with greatest number of small business bankruptcies in the last quarter of 2010. The Chicago-Naperville area showed the greatest decline, dropping 30.13 percent year-over-year.

Following behind — and flying in the face of the state’s overall trend — were a number of California MSAs such as Sacramento-Arden-Arcade- Roseville, many of which reported double-digit decreases during the same period.

But the news wasn’t positive across the board, with five MSAs experiencing a year-over-year rise in bankruptcy rate. One surprising results involved the Wisconsin-Rest of State MSA, which saw a 16.52 percent jump in small business from the last quarter of 2009 to the last quarter of 2010 — more than any other MSA on Equifax’s top 15 list.

“For small businesses, the road to economic recovery was marked by a number of challenges in 2010, and many states such as California and Oregon face an uphill battle in the months ahead,” said Dr. Reza Barazesh, an Equifax senior vice president. “Despite these hurdles, the landscape is showing signs of improvement. Our recent analysis indicates that bankruptcy trends are easing and creating an environment that is more conducive to cultivating small business growth.”

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