Alarming surge in small Business Bankruptcies
2023 has seen an alarming surge in small business bankruptcies, with rates rocketing to heights not observed since 2020. As reported by the Wall Street Journal, almost 1,500 small businesses declared bankruptcy by September 28, a figure that rivals the entirety of 2022’s numbers. But bankruptcy petitions aren’t the sole indicator of financial strain; a rise in loan delinquencies and defaults since June 2022 confirms a mounting crisis. As per a Vistage Worldwide survey, over half of the polled 750+ small businesses anticipate or sense an ongoing recession. Bankruptcy attorney forewarns that the real brunt of escalating interest rates has yet to be felt by many overleveraged small businesses. The core reasons driving the bankruptcy upswing include: heightened interest rates, skyrocketing wages, restrictive bank credit, overleveraging, and the remote work trend that’s reducing demand. This fiscal landscape is further aggravated by the Federal Reserve’s interest rate hike to between 5.25% and 5.50%—a rate unprecedented in 22 years. Notably, in California, a noteworthy wage hike has been introduced, mandating a 30% increment in fast food workers’ minimum wage, pushing it to $20 per hour. #SmallBusiness #strike #Bankruptcy #InterestRates #FederalReserve #EconomicCrisis #BankCredit
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