Small Business bankruptcies may be on the decline

8/26/2011

Small business finances and credit situations may be improving, according to a recent study by research and information firm Equifax Commercial Information Solutions.

The study shows the rate of small business bankruptcies significantly declined between the first quarters of 2010 and 2011. Some large western metropolitan areas saw a greater reduction than the national drop of 15.32 percent: The Denver region realized a more than 26 percent improvement, and the communities surrounding Portland, Oregon, rate went down over 13 percent.

Despite the promising figures, the strength of small businesses still lags behind pre-recession figures.

"In light of today's shifting economic conditions, bankruptcy trends serve as a valuable prism through which to evaluate the credit health of today's small business market," said Equifax senior vice president Dr. Reza Barazesh. "Our latest analysis shows that while business failures may be on the decline, conflicting trends are still making us question if the worst is behind us."

As small businesses will be one of the keys to a full U.S. economic recovery - they employ more than half of the nation's private-sector workers, and an even higher percentage in rural areas - an improvement in their credit situation may positively affect the rates of commercial loans and employment.