Equifax Study Shows Improvement and Weakness in Small Business Bankruptcy Trends

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Atlanta (PRESS RELEASE – March 19, 2011) – Recognizing the impact of small firms on the health of today’s economy, Equifax (NYSE: EFX) conducted an extensive study on 2010 bankruptcy trends among the nation’s more than 24 million small businesses. Equifax data showed that small business bankruptcy petitions dropped in many areas extending from coast to coast, with some Western regions experiencing sharp declines. While bankruptcy rates have decelerated in many U.S. regions, small business economic turmoil in California remained high throughout 2010 and accounted for nearly 20% of the country’s business failures.

“For small businesses, the road to economic recovery was marked by a number of challenges in 2010 and many states such as California and Oregon face an uphill battle in the months ahead,” said Dr. Reza Barazesh, senior vice president, Equifax Commercial Information Solutions. “Despite these hurdles, the landscape is showing some signs of improvement. Our recent analysis indicates that bankruptcy trends are easing and creating an environment that is more conducive to cultivating small business growth.”

Focusing on the Q4 2009 to Q4 2010 timeframe, this Equifax study analyzed national bankruptcy trends by metropolitan statistical area (MSA). While high bankruptcy rates continue to put pressure on geographies across the country, 10 of the top 15 MSA’s with the greatest number of small business bankruptcies in Q4 2010 experienced a year-over-year drop from Q4 2009. Declining more than any other MSA was the Chicago-Naperville area, which saw a 30.13% decrease year-over-year in Q4 2010. Following behind were a number of California MSA’s, many of which reported double-digit decreases during the same time period. However, the news was not positive on all fronts, with five MSA’s experiencing a year-over-year rise in bankruptcy rate. One surprising result involved the Wisconsin-Rest of State MSA, which saw a 16.52% jump in small business bankruptcies from Q4 2009 to Q4 2010 – more than any other MSA on the top 15 list below.

MSA Bankruptcy
Total Q4 2009
Total Q4 2010
% of Change
Los Angeles – Long Beach – Glendale, CA 1082 1230 13.68%
Riverside – San Bernandino – Ontario, CA 705 642 -8.94%
Houston- Sugar Land – Baytown, TX 411 445 8.27%
Sacramento – Arden – Arcade – Roseville, CA 533 424 -20.25%
San Diego – Carlsbad – San Marcos, CA 438 389 -11.19%
Denver – Aurora, CO 463 368 -20.52%
Santa Ana – Anaheim – Irvine, CA 410 365 -10.98%
Portland – Vancouver – Beaverton, OR-WA 407 333 -18.18%
Dallas – Plano – Irving, TX 367 327 -10.90%
California – Rest of State 352 300 -14.77%
Oakland – Fremont – Hayward, CA 293 286 -2.39%
Wisconsin – Rest of State 236 275 16.52%
New York – White Plains – Wayne, NY-NJ 270 272 0.74%
San Jose – Sunnyvale – Santa Clara, CA 248 266 7.26%
Chicago – Naperville – Joliet, IL 375 262 -30.13%
Total 6590 6184 -6.16%

While the total number of bankruptcies among the top 15 MSA’s with the highest number of small business bankruptcies in Q4 2010 declined 6.16% from 6,590 in Q4 2009 to 6,184 in Q4 2010, California’s economic woes continued through the end of 2010. Equifax data shows that at least six California metro areas made the list of top 15 MSA’s with the highest number of small business bankruptcies from Q4 2009 to Q4 2010. In fact, California’s impact is revealed in other ways. Equifax analysis shows that among the top 15 MSA’s reporting the highest number of bankruptcies, California metro areas in this group comprised 17.41% of all U.S. bankruptcies petitions in Q4 2009 and reached a high point of 19.89% in the last quarter of 2010. Further analysis shows that all California MSA’s – 22 in total- accounted for nearly a quarter of U.S. small business bankruptcy petitions from Q4 2009 to Q4 2010. The chart and table below provide a more in-depth look at the key role California has played in national bankruptcy trends.

MSA Group Bankruptcy Total Q4 2009 Bankruptcy Total Q4 2010
Total Bankruptcies – CA MSAs in Top 15 4,016 3,902
Riverside – San Bernandino – Ontario, CA 23,319 19,616
Houston- Sugar Land – Baytown, TX 17.41% 19.89%

Chart 1: California Bankruptcies (Top 15 MSA’s as a Percent of All Bankruptcies, Total California Bankruptcies as a Percent of Total U.S. Bankruptcies)

As part of the study, Equifax also analyzed the 15 metro areas with the fewest small business bankruptcy filings in the fourth quarter of 2010. Our analysis revealed that 12 of the 15 MSA’s saw a decline in the number of bankruptcy petitions from Q3 2010 to Q4 2010 and the total number of bankruptcy filings for these 15 metro areas decreased by 50% in Q4 2010 year-over-year. As the table below shows, all of these MSA’s reported 9 bankruptcies or less during Q4 2010.

MSA Bankruptcy Total
Q4 2009
Bankruptcy Total
Q3 2010
Bankruptcy Total
Q4 2010
Kingsport – Bristol, TN-VA 18 6 9
Baton Rouge, LA 18 17 9
Erie, PA 16 24 9
Gulfport – Biloxi, MS 10 13 9
Amarillo, TX 17 5 8
Charleston, WV 9 6 8
Killeen – Temple – Fort Hood, TX 20 23 7
Binghamton, NY 16 13 7
South Bend – Mishawaka, IN-MI 18 7 6
Trenton – Ewing, NY 12 7 6
Shreveport – Bossier City, LA 9 7 6
Lafeyette, LA 7 11 5
Gainesville, FL 6 8 5
Davenport – Moline – Rock Island, IA-IL 17 11 4
Lynchburg, VA 14 11 3
Total 207 169 101

For this study, Equifax applied analytics to identify the total number of small businesses and define the MSA’s within the sample population. Equifax classifies a small business as a commercial entity of less than 100 employees. As part of the study, Equifax analyzed Chapter 7, 11 and 13 filings. Chapter 7 is a liquidation proceeding in which a debtor receives a discharge of all debts, while Chapters 11 and Chapter 13 are reorganization bankruptcies that allow individuals and companies to pay off debt over a set period of years.

About Equifax Commercial Information Solutions

Equifax Commercial Information Solutions is the leading provider of small business intelligence. We provide the information and expertise necessary for companies to best understand and manage their dealings with small business customers, prospects and suppliers. Our best-in-class commercial credit risk data, combined with highly predictive scoring, corporate linkage, and innovative technology, enables companies to make quick, confident credit decisions and minimize potential losses. Leveraging our EFX IDkeying and linkage technology, companies can also gain greater visibility into their supply chain as well as improve the precision of their sales and marketing efforts – from customer acquisition to retention and expansion.

About Equifax

Equifax, Inc. empowers businesses and consumers with information they can trust. A global leader in information solutions, we leverage one of the largest sources of consumer and commercial data, along with advanced analytics and proprietary technology, to create customized insights that enrich both the performance of businesses and the lives of consumers.

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