Bankruptcies rise the most in Lost Angeles and Chicago
For the five month period from Jan to May 2009, total commercial bankruptcy filings stood at 36,106. The total filings are up from 23,829 for the same period last year, showing an increase of 52%. Compared to the same period in 2006, after Bankruptcy laws were revised to prevent abuse, the increase is 240%.
The vast majority of these filings have been filed by small business owners and entrepreneurs. The increasing bankruptcies in small businesses and fewer start ups is expected to cause a major dent to the economy. In a recession, generally more number of people are thrust into becoming self employed. But this time the tighter credit market and stringent bankruptcy laws have an adverse impact on this trend as well.
Small businesses with fewer than 500 employees make up almost half of the total gross domestic product. According to Equifax, the major run up in the small businesses is caused by transportation industry which includes automobile and airline business. After transportation, construction, manufacturing and retail industries are the major causes.
Small businesses filings have grown most in the Los Angeles and Chicago metro area, according to Equifax.
The lack of credit remains a major factor for these high bankruptcy numbers.
Related Links:
http://www.usatoday.com/money/smallbusiness/2009-06-30-small-businesses-bankruptcy_N.htm
http://www.jaxobserver.com/2009/07/01/business-bankruptcies-up-240-since-2006/
