2011: Brighter Year for Small Business?

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Mar 16th, 2011 @ 1:18 PM by Amber Nelson
The latest study from credit tracking company Equifax reveals that small business bankruptcies are trending downward, hinting at better conditions ahead for the country’s entrepreneurs. From the fourth quarter of 2009 to the fourth quarter of 2010, 10 of the top 15 metropolitan areas with the most small business bankruptcy petitions showed a yearly decline. The average drop for the top 15 areas was 6.16 percent, a respectable descent. However, some areas did show increased bankruptcy petitions, especially metro areas in California.

"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, senior vice president, Equifax Commercial Information Solutions. "Despite these hurdles, the landscape is showing some 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."

The study does breathe some hope into the possibilities for small business this year. Among those metro areas that did much better during the latest quarter were the Chicago-Naperville area where bankruptcies fell 30.13 percent in the past year. The Sacramento-Roseville, Ca. area saw a drop of 20.25 percent in bankruptcy petitions, and the Denver-Aurora area had 20.52 percent fewer filings. Other areas with double-digit declines include the San Diego, Anaheim, and Portland metro areas.
The areas on the top 15 list of highest bankruptcies that didn’t fare so well include the Los Angeles metro area (where petitions jumped 13.68 percent in the past year), Houston-Sugarland area, Wisconsin-Rest of State area, New York-White Plains, NY area, and the San Jose, Ca area.
California, in particular, has not seen as much rebound in small businesses. Bankruptcy petitions in California made up nearly 25 percent of all U.S. small business bankruptcy filings between the last quarter of 2009 and the last quarter of 2010. It looks like the state that typically leads the nation out of recessions is now playing catch up and may do so for some time.
About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.
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