Small businesses that have been struggling financially may face significant challenges if the widely supported bankruptcy rules expire. These rules, which were expanded by Congress in 2020 as part of Covid-19 relief efforts, have provided many small businesses with much-needed protections and benefits.
The maximum debt limit for small businesses was increased from $2.7 million to $7.5 million as a result of these rules, giving many businesses the opportunity to reorganize their debt and stay afloat during challenging times. However, these rules are set to expire soon, and it is unclear whether Congress will take action to extend them before it’s too late.
Senator Dick Durbin (D-Ill.) introduced a bipartisan bill in April (S.4150) to extend the $7.5 million limit for another two years. Unfortunately, with the House of Representatives currently out of session, it is unlikely that the bill will pass before the expiration date. This means that many small businesses may lose access to the benefits of small business bankruptcy if the rules expire as scheduled.
If this happens, struggling businesses may be forced to seek other forms of financial assistance or declare bankruptcy without these important protections in place. This could have significant implications for both individual businesses and the broader economy as a whole. It remains to be seen whether Congress will act quickly enough to save these important safeguards for small businesses before they disappear forever.
In conclusion, while there are some concerns about extending these bankruptcy rules further than two years, many small business owners rely on them for financial stability and growth opportunities during difficult times. It is crucial that Congress takes action soon to ensure that these vital protections remain in place for all small business owners who need them most.
