US Small Business Bankruptcies Jump 67% as Inflation and High Rates Squeeze Credit
Updated
Updated · The Guardian · Jul 19
US Small Business Bankruptcies Jump 67% as Inflation and High Rates Squeeze Credit
2 articles · Updated · The Guardian · Jul 19
Summary
Small business bankruptcy filings rose 67% in the latest quarter from a year earlier, with the American Bankruptcy Institute citing persistent inflation, elevated interest rates and geopolitical instability.
Credit access is the more immediate pressure point, the institute said, as some lenders grow more cautious even though a modest 25-basis-point Fed move would barely change payments on a typical $500,000 equipment loan.
52% of small business loan applications were approved last year, up from 46% in 2021, while Biz2Credit said debt repayment volume climbed 24% and debt coverage improved to 1.40x in Q1 2026 from 0.57x a year earlier.
Bank chiefs have not yet sounded broad alarms: JPMorgan's Jamie Dimon warned of stress in $5.1 trillion of leveraged finance, but Bank of America and Wells Fargo still reported solid consumer spending, stable asset quality and resilient business health.
The mixed picture suggests distress is rising at the margin, but for many established small businesses demand and credit availability—not a quarter-point rate increase—remain the bigger determinants of hiring and investment.