The shift is aggravating concerns that billion-dollar corporations, buoyed by soaring stock prices and bumper profits, are operating in a very different economy than small businesses<\/a>.<\/p>\n ‘Small business people might be short on money, but you won’t find a big box store that will work as hard as us to try and stay in the game,’ said Kelly Vore, whose 119-year-old shop closed on Christmas Eve<\/a>.<\/p>\n A growing number of small businesses have filed for bankruptcy this year – analysts tell the Daily Mail it points to America’s widening economic gap between rich corporations and small firms<\/p>\n Joe Barsalona, a\u00a0bankruptcy lawyer, warns that he’s seeing more small businesses struggling. That could be a lead-indicator for major financial problems:\u00a0‘The little guys are going to start falling first’<\/p>\n She said small businesses often rely on owners putting their own finances on the line to keep the doors open \u2014 something major corporations rarely need to do.\u00a0<\/p>\n ‘Every small business owner will tell you we probably went a little further than we should just to survive,’ she said.\u00a0\u00a0<\/p>\n ‘Our formula was always snug \u2014 we were never rolling in abundant cash. Everything is just much more expensive than when I took over.’\u00a0<\/p>\n Inside America’s small business worries\u00a0<\/p>\n Despite last-ditch efforts from owners, Subchapter V bankruptcies, a restructuring program created for small businesses, are on the rise.\u00a0<\/p>\n The bankruptcy filing, introduced in December 2019, is for companies with less than $3.4million in debt. That means it exclusively represents the smaller shops that line America’s Main Streets.\u00a0\u00a0<\/p>\n By the start of December, 2,221 US businesses had filed for Subchapter V bankruptcy, according to new analysis from economists at The Kobeissi Letter<\/a>.\u00a0<\/p>\n That was already more small business bankruptcies than the 2,211 filings through all of 2024, even with weeks still left on the calendar.\u00a0<\/p>\n The filings still represent a small fraction of America’s roughly 33 million small businesses, but economists say the acceleration \u2014 not the raw number \u2014 is what’s raising alarms.\u00a0<\/p>\n Kelly Vore, the owner of Downtown Home & Garden, a small shop in Ann Arbor, Michigan, shuttered her store in mid December after her rent increased: ‘Everything is just much more expensive than when I took over’<\/p>\n Vore’s iconic shop – which sold plants, garden supplies, pet toys, and kitchenware – operated for 119 years\u00a0<\/p>\n And the trend has gotten worse in the back half of 2025. In August alone, roughly 200 small businesses entered bankruptcy court \u2014 a 17 percent jump compared to the same month last year.\u00a0<\/p>\n ‘US small business bankruptcies are surging as if there is a recession,’ analysts at The\u00a0Kobeissi Letter wrote in a December 6 post on X.\u00a0<\/p>\n Barsalona said Subchapter V is really effective for small businesses that are trying to keep their doors open. It’s cheaper than Chapter 11 filings and normally keeps the business in a small founder’s control.\u00a0<\/p>\n But, he warns that the increase is a worrying sign for the broader economy.<\/p>\n ‘This is going to lead to a further increase in large-size bankruptcies and distress in the economy,’ Barsalona said. ‘We’re just seeing the start of this.’\u00a0<\/p>\n XXX Don’t understand this par above – well I kinda do but think it can be clearer. Should it be something like<\/p>\n ‘Small businesses tend to fall first,’ he said. ‘When enough of them start going under, the stress eventually spreads to larger companies. We\u2019re likely just seeing the beginning of that process.’<\/p>\n The jump in reorganization filings comes as small American shop owners are becoming increasingly pessimistic about the country’s economic strength.\u00a0<\/p>\n According to polls by the US Chamber of Commerce,\u00a0small business owners gave the US economy a 68.4 out of 100 grade last quarter, a drop from the previous 72 out of 100 reading.\u00a0<\/p>\n The share that rated their financial health as ‘very good’ fell to 34 percent \u2014 down two points from the previous quarter\u00a0\u2014 while\u00a0businesses describing their finances as ‘somewhat poor’ ticked up, from six percent to seven percent.<\/p>\n A blitz of businesses are closing up shop, too. This year, 8,234 shops have shuttered, a 12 percent jump from last year’s record-setting store closure list<\/p>\n More than half of small businesses \u2014 58 percent \u2014 said they were planning price hikes to help pay<\/a>\u00a0for tariffs.\u00a0<\/p>\n The recent bankruptcy trend also lines up with other warning signs.<\/p>\n In November, payroll processor ADP said small businesses cut 120,000 job<\/a>s across the US.\u00a0<\/p>\n The cuts were concentrated almost entirely among companies with under 50 workers, while midsize and large companies contributed a net of 90,000 jobs.\u00a0<\/p>\n This year, a record 8,234 stores permanently shuttered, according to research from Coresight Research shared with the Daily Mail<\/a>.\u00a0<\/p>\n ‘Two economic realities’<\/p>\n Today’s bankruptcy data reveal a widening divide in the economy: while mom-and-pop businesses are increasingly turning to court protection while large companies are doing so less often.\u00a0<\/p>\n![\"A](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/01\/105137867-15427659-A_growing_number_of_small_businesses_have_filed_for_bankruptcy_t-a-4_176753152999.jpeg\")
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<\/p>\n![\"A](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/01\/104982943-15427659-A_blitz_of_businesses_are_closing_up_shop_too_This_year_8_234_sh-a-6_176753153069.jpeg\")
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![\"Economists](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/01\/105082829-15427659-Economists_tell_the_Daily_Mail_they_re_seeing_a_two_sided_econom-a-5_176753153032.jpeg\")
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