Small business bankruptcy rates expected to rise in 2010 and 2011.

A Small Business Sentiment Survey (SBSS) shou's that a majority of small business owners fear failure in 2010 or 2011.

"To borrow an expression from Alan Greenspan, there is an 'irrational exuberance' in the markets right now," comments Al Angrisani, CEO of Angrisani Turnarounds and former Assistant U.S. Secretary of Labor. "But small businesses are failing at an unprecedented rate and, according to our survey data, about two-thirds of small business owners are concerned or extremely concerned about business survival through the next two years. And because the six million businesses with fewer than 100 people employ 70% of the American workforce, any recovery that leaves them out cannot be sustained."

In fact, Equifax, the credit-reporting agency, reported U.S. small business bankruptcy rates soared 81% in June 2009 compared with June 2008. More than 10,000 small businesses closed their doors, unable to withstand continued assault on several fronts.

More recently, on November 3, 2009, The Wall Street Journal reported that "Business Bankruptcy Filings Increased 7% in October." Journal reporter Eric Morath wrote that the increase reversed two consecutive months of declining commercial filings; he opined "the increase indicated that bankruptcies could continue to rise as the economy struggles to stabilize."

Support for Angrisani's and the Journal's predictions comes from Jack Williams, a bankruptcy professor at the Georgia State University College of Law. Williams pointed out that after two months of decline the 7% rise in commercial filings shows that businesses are still struggling to access financing and are facing weak demand for their products.

Williams also noted that on a year-to-year basis, business bankruptcies shot up 24% in October compared with the same month in 2008, an increase he called "substantial." He also believes that it is a bad omen for the final months of 2009 and the first quarter of 2010. "Bankruptcy filings are a lagging economic indicator so it's likely that we'll see bankruptcy filings increase for the next several quarters," he said.

Small Business Sentiment Survey (SBSS)

The basis for Angrisani's prediction is an online survey of small business owners commissioned by Angrisani Turnarounds, LLC, and conducted by Toluna Research. The survey polled a representative sample of 150 owners of businesses with fewer than 100 employees from various industries and regions. Designed to assess the mood of small business...