Business bankruptcies running at twice last year's pace

Ninety-six businesses in Western Washington declared bankruptcy in April, more than double last year's figure, while the number of families seeking relief from creditors continued to climb.

The sharp increase in business filings follows a similar jump in March, when 77 businesses filed for bankruptcy, compared to 34 the previous year.

At the current pace, this year's business filings could surpass those in 2008, which saw 531 bankruptcies — the highest in Western Washington in a decade. Eastern Washington has seen a slight increase in businesses in bankruptcy.

Business filings are a fraction of total bankruptcy filings, but have a ripple effect by contributing to unemployment and households' financial distress.

In the first four months of this year, about 9,750 people declared bankruptcy, up more than 50 percent from a year ago. Among the most populous counties, Snohomish County had the highest annual growth in filings, with nearly a 70 percent jump to 322 filings, followed by Clark, King, Spokane and Pierce.

Washington ranks seventh among the states in the annual per capita increase in bankruptcy filings, according to AACER, a bankruptcy-data and -management firm. The state ranks 21st in per capita filings.

High unemployment and a housing-market downturn have driven the increase in bankruptcies. So has a tightening of credit, including loans backed by the federal Small Business Administration.

"Even though lenders have the benefit of government guarantees on these loans, that hasn't really made a heck of a lot of difference in their willingness to advance credit to these borrowers," said Mark Costello, a spokesman for the SBA's Seattle district office.

But the new economic-stimulus program is starting to kick in: Costello says SBA lending is up one-third since higher loan guarantees and other changes went into effect in mid-March.

Sanjay Bhatt: 206-464-3103 or sbhatt@seattletimes.com