More small-business bankruptcies reported in California

LOS ANGELES, Dec. 22 (Xinhua) -- As credit lines have shrunk and consumers have cut back on spending, thousands of small businesses have closed their doors in California over the last year, it was reported on Tuesday.

The latest data show that small-business bankruptcies shot up 81 percent in the state for the 12 months ended Sept. 30, compared with the previous year, according to the Los Angeles Times.

About 19,000 small businesses filed for bankruptcy in California during the 12-month period, up from 10,500 the previous year, the paper said.

Filings nationwide were up 44 percent, said the paper, citing figures from the credit analysis firm Equifax Inc.

The Obama administration's new plan to give a boost to small businesses reflects continued trouble in that sector, which is facing new failures even as much of the nation's economy is stabilizing, the paper noted.

The plight of struggling firms has been aggravated by the reluctance of banks to lend money, said Brian Headd, an economist at the Small Business Administration's office of advocacy.

"While bankruptcies are up, overall, small-business closures are up even more," He add said.

The actual number of small businesses in trouble is probably higher, experts said, because many owners file for personal bankruptcy rather than seek protection for the business.

Dennis McGoldrick, a bankruptcy lawyer in Torrance near Los Angeles, said his clients are all stuck in similar situations -- capital is hard to come by, customers are tough to attract and debt is piling up.

"We can't keep up," McGoldrick said. "There's more people that want to come in every day than I can see."

Recognizing the problems of small business owners, the Obama administration has proposed using federal stimulus money to help funnel more loans to small businesses. The White House has also asked Congress to eliminate capital gains taxes for one year on new investments in small-business stock, and called for a new tax incentive to encourage small businesses to hire more employees.

On Dec. 14, Obama called a meeting of executives of Wells Fargo&Co., Citigroup Inc., Bank of America Corp. and nine other large banks, and told them that they owed it to the nation to make more loans to small businesses and help rebuild the economy.