Rising Bankruptcies: Main Street Businesses Struggle Amidst COVID-era Support Phases Out
Originally Published 2 years ago — by CNBC
Small business bankruptcies, particularly through Subchapter V filings, are increasing in the United States. The Small Business Reorganization Act of 2019 introduced Subchapter V as a simpler and more cost-effective way for small companies to reorganize their debts. However, business owners should carefully consider the timing of declaring bankruptcy and explore other options before resorting to it. Access to capital for small businesses is currently low, and short-term funding options like merchant cash advances can be risky due to high costs. It is important to protect personal assets and seek professional advice before making financial decisions. Different bankruptcy options have varying costs and restrictions, and the success of a bankruptcy filing should be carefully evaluated. Bankruptcy can have long-term consequences, including impacting personal credit and making business details public. Therefore, it should be considered as a last resort.