Post-Bankruptcy Business Success

April 18, 2011  |  

(Businessweek) — Small business owners who declare personal or business bankruptcy face restricted access to credit and higher interest rates for years. But those who persist with a new or reorganized company can become just as large and profitable as counterparts who have never declared bankruptcy. That’s according to a new report released by the U.S.Small Business Administration, “Beyond Bankruptcy: Does the Bankruptcy Code Provide a Fresh Start to Entrepreneurs?” The research was done by Aparna Mathur, a resident scholar at the American Enterprise Institute, a conservative think tank based in Washington. Mathur, who specializes in economic research on small business, bankruptcy, and tax policy, spoke recently to Smart Answers columnist Karen E. Klein. Edited excerpts of their conversation follow.

Karen E. Klein: Why did you choose to study small companies that had declared bankruptcy?

Aparna Mathur: I had studied bankruptcy and small business as a PhD student. I realized that no one had studied entrepreneurs in a post-bankruptcy scenario. I wanted to know: How do companies that have gone through a bankruptcy compare with those who have not?

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