Small Business Bankruptcies Double
Small businesses are going bankrupt this year at more than twice the rate that they were last year, according to Equifax.
Data from the commercial information and analytics firm shows that bankruptcies among companies with fewer than 100 employees were up 120 percent from the first quarter of 2008 compared to the first quarter of 2009 and had increased by 24 percent from the immediately preceding quarter.
The transportation industry suffered the greatest loss, with 2.5 percent of all small businesses filing for bankruptcy in the first quarter of 2009. In the construction and manufacturing industries, 2.2 percent and 2.1 percent of businesses filed for bankruptcy, respectively.
While small, owner-operator trucking businesses are being hit especially hard as freight loads lighten, non-asset based companies are having a much easier time, says Andrew Leto, CEO of GlobalTranz, a third-party logistics provider based in Phoenix. "Freight volumes have gone down dramatically," Leto says. "As a result, trucking companies are cutting down capacity."
Non-asset businesses that rely on contracts from over-capacity clients are faring well in relation to companies that have been forced to reassess skewed ratios of supply and demand.
Public administration stood out as the industry with the lowest rate of chapters 7 or 13 bankruptcies, at 1.2 percent.
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