Small Business Bankruptcy Filings Surge 50% in First Half of 2026 Amid Persistent Economic Pressures

Official data from the American Bankruptcy Institute (ABI) and Epiq AACER confirm a sharp 50% year-over-year increase in Subchapter V small business Chapter 11 filings, rising to 1,663 in the first half of 2026 from 1,107 in the same period of 2025. Overall commercial Chapter 11 filings climbed 28% to 4,589. This acceleration aligns with broader trends: total commercial bankruptcies rose 13%, and total U.S. bankruptcy filings increased 12% to 310,550. ABI Executive Director Amy Quackenboss attributed the rise to higher borrowing costs, increasing expenses, and geopolitical volatility, noting small businesses turning to reorganization for relief. The National Federation of Independent Business (NFIB) Small Business Optimism Index fell to 95.3 in May 2026, below its long-term average, with 18% of owners citing inflation as their top problem—the highest since late 2024. A net 36% raised selling prices, the most since early 2023. These pressures coincide with reports of household debt nearing $18.8 trillion and worsening delinquency rates amid sustained inflation and elevated interest rates, as highlighted in Epiq and ABI quarterly releases. While policy measures like the permanent Small Business Deduction extension and SBA grants provide some support, the filing surge points to ongoing distress with potential ripple effects on employment and local economies.