Here's Why Small Businesses Are Filing Bankruptcy in RECORD Numbers

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A federal program that was supposed to help small businesses dig out from debt is now signaling a full-blown crisis. Subchapter V bankruptcies — designed for businesses with modest debt loads — just hit record highs. At the same time, today’s ADP report shows exactly where the real weakness is: small businesses are laying people off.
In this episode, we break down:
 • Why Subchapter V bankruptcies are surging as debt limits tighten
 • Why ADP’s small-business data is the most important warning sign in the economy
 • How tariffs, inflation, and uncertainty have crushed the engine of U.S. job growth
 • Why regulations hit small businesses harder than anyone else
 • How giant corporations benefit from complex bills like Dodd-Frank and Sarbanes-Oxley
 And why the administration needs to cut costs, cut red tape, and cut barriers if it wants any shot in 2026!

Episode Transcript

Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it we'll have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.

Speaker 2 (00:16):
I do not like to see this federal program designed
to help small business owners small American businesses cut debt
and get out from underneath it is well, it's hitting
records right now. It's a new sub chapter bankruptcy, sub
chapter five. And the rules originally allowed for businesses under

(00:41):
I think it was seven million dollars in debt to
file under this, they lowered it to three million. And
we've got a record amount of businesses that are using
this part of the bankruptcy code to close down their business.
Top of that, we had the ADP jobs numbers come

(01:04):
out today. They were down, but not as bad as
they were supposed to be. Outside of the fact that
the most important number that I look at when it
comes to the ADP numbers, when it comes to any
jobs numbers, is small businesses. Small businesses is the major
point of weakness. Major point of weakness. They continue, small

(01:27):
businesses continue to lay people off again. I know I've
said this a million times here on the program, but
that's the engine of job growth in this country, always
has been. That's what's made our economy dynamic. I've often
talked about creative destruction, you know, Joseph Schumpeter idea. You

(01:49):
know that something is destroyed, something else is created. Build
a better mouse trap. People will be a path to
your door. Small businesses without a doubt. As we Forre
told that, we told her that this is going to happen.
Most certainly hit by teriffs and some of the uncertainty
that continues to surround tariffs, and without a doubt, a

(02:11):
weakening economy. That's where we're at right now. And I've
said that this needs to be a major focus of
this administration. Obviously, cutting costs, bringing prices down, seeing that

(02:32):
gasoline prices right now, Hopefully that will filter its way
through the economy. It will, there's no doubt it's going
to help transportation costs. That's going to help, But we
still need to do more. We've already talked about grocery costs.
Insurance is another thing. Some great ideas put forward. Again,
no one's following through on any of this stuff. But
another thing as well, is making the burden on lessening

(02:57):
the burden on small businesses out there. I've described it
as such because I'm a small business owner. Small businesses,
you know, you're face with tons of regulations, tons of regulations, rules,
things you have to abide by. Again, because you're a
small business, it's more costly for you. It's economy scaled,

(03:19):
more costs you for you to go ahead and deal
with many of these things. Now, look at these regulations,
look at these rule look at taxes, Look at them
as you would if you were looking out over a
demilitarized zone or a minefield. Okay, So imagine a small
business owner. He's living in a house. Okay, in a house.
He's gotta go to work every single day, Okay, leaving

(03:40):
his house, but he's got he's got to go across
this minefield, this to militarized zone. But he knows where
the minds are. Okay, he knows where not to tread,
because you're gonna step on the mind You're boom, You're done,
your business is over. Well what if every morning he
woke up and those mines are in different places, they

(04:04):
move overnight, Well, it's gonna take him hell of a
lot more to get to work, right, because he's got
to locate these mines. He's got to figure them out.
What do I have to do? And this is what
ridiculous regulations are all about. This is why when you
get these massive pure all bills, whether they be Sarbanes

(04:25):
Oxley or whether they be God frank, whatever it may be,
they're thousands and thousands of pages that are you know,
a pimple on the ass of a major corporation. Quite frank,
you can't call that actually benefits major corporations because it
puts their competitors out of business. Small business, the upstarts,

(04:48):
they can't afford to deal with it. Again, cleaning the deck,
getting rid of ridiculous regulations. Okay, it's going to help
lessening the burd with tariffs because that's been real. Okay,
it's real. It's affected small businesses. It's there in the numbers,
and numbers don't lie. Administration needs to focus on this

(05:11):
and then they got a shot at holding everything. In
twenty twenty six, Watchdog on Wall Street dot Com