Small business bankruptcies exploding 50 percent while owners pretend things are fine

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A one month bounce in sentiment is not the same thing as financial health. The hard bankruptcy data show..

• 1,663 Subchapter V small business filings in H1 2026

• 1,107 filings in H1 2025

• 50% year over year increase

• 2,446 Subchapter V filings in all of 2025, itself an annual record

• Using the published totals, the trailing 12 months ending June 2026 equals 3,002 filings 2,446 minus 1,107 plus 1,663

• That is 23% above the previous calendar year record and higher than any published annual total since Subchapter V took effect in 2020

• 17,285 overall commercial filings in H1 2026, up 13%

• 4,589 commercial Chapter 11 filings, up 28% year over year

• 25,960 total business bankruptcies during the 12 months ending March 2026, up 11.4% from 23,309

• Business filings have nearly doubled from 13,160 in 2022 to 25,960 now

Meanwhile, the optimism index only rose to 97.4, still below its 52 year average of 98.0, while the uncertainty index remains at 89 versus a historical average of 68. NFIB also says high rates and modest growth are keeping owners cautious on hiring and capital spending.

Sentiment measures what surviving owners hope may happen. Bankruptcy filings measure actual businesses entering federal court because their debts are no longer sustainable. A one month improvement in expectations while there’s been a 50% surge in small business reorganizations and a near doubling of broader business failures is not evidence of Main Street strength.

Owners feel rates crush margins and banks tighten credit so hard that even decent businesses cannot roll debt.