WASHINGTON, Feb. 25, 2021 /PRNewswire/ -- Small business owners rarely utilize bankruptcy as a tool to handle financial difficulties, according to original survey data from SCORE, mentors to America's small businesses. As a result of COVID-19's financial impact on small businesses, researchers from Brigham Young University, Harvard University, University of Chicago and University of Toronto, partnered with SCORE to survey small business owners' attitudes toward bankruptcy, and awareness of bankruptcy as a potential tool.
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Most small business owners are unaware of bankruptcy options and protections with only a third (33%) reporting "a good understanding of the bankruptcy system."
Most small business owners perceive negative stigma related to bankruptcy:
- 65% of small business owners agree that it is embarrassing for a business owner to file for bankruptcy.
- 60% agree that friends and family may look down on a business owner who files for bankruptcy.
- 54% agree that clients will be less willing to buy from a business owner who filed for bankruptcy.
Education reduces stigma around bankruptcy and helps business owners see bankruptcy as a potential tool. Some small business owners were shown a short educational video on bankruptcy options and benefits:
- 74% of those who watched the educational video correctly answered questions about bankruptcy options and benefits, in comparison to 40% of those who received no educational information.
- 25% of those who watched the educational video disagreed with negative stigma around bankruptcy, in comparison to 17% who received no additional information.
"It's important that small business owners who are struggling understand all of their financial options," said SCORE CEO Bridget Weston. "SCORE mentor are there to help, and to provide guidance and support along every step of the way."
Click here to learn more about bankruptcy options and protections for small business.
Since 1964, SCORE has helped 11 million entrepreneurs to start or grow a business. SCORE's 10,000 volunteers provide free mentoring, workshops and educational services to 1,500+ communities nationwide, creating 45,027 new businesses and 74,535 non-owner jobs in 2020 alone. Visit SCORE at www.score.org. Follow @SCOREMentors on Facebook, Instagram and LinkedIn.
Funded [in part] through a Cooperative Agreement with the U.S. Small Business Administration.
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