Oklahoma is experiencing a striking contrast in its business climate: the state continues to see strong entrepreneurial activity and new business formation while also recording one of the nation's highest increases in business bankruptcies.

According to a recent analysis by LendingTree, Oklahoma ranks ninth nationally for its rate of commercial bankruptcies. Business bankruptcy filings increased 40.7% during the 12-month period ending March 31, 2026, representing the seventh-highest year-over-year increase among all 50 states.

Using records from the Administrative Office of the U.S. Courts and small-business data published by the U.S. Small Business Administration, LendingTree found that commercial bankruptcy filings in Oklahoma increased from 236 to 332 year over year. The state recorded 83.9 business bankruptcy filings per 100,000 small businesses.

At the same time, Oklahoma continues to attract entrepreneurs at a strong pace. The state recorded 56,855 business applications in 2025, according to SmallBusinessStatistics. That represents a 6% increase over 2024 and a 38.6% increase compared with the state's pre-pandemic baseline in 2019.

That entrepreneurial activity has helped Oklahoma rank fourth overall in a WalletHub study evaluating the best places to start a business. The study identified business costs as a particular strength for Oklahoma, while the state ranked lower in access to resources, in part because of its distance from coastal markets where significant amounts of capital are concentrated.

Oklahoma's small-business activity is part of a much larger private-sector economy. In 2024, the state was home to 123,123 private-sector establishments supporting approximately 1.35 million private-sector jobs. Meanwhile, the U.S. Small Business Administration approved 545 loans totaling $343.6 million across Oklahoma during fiscal year 2025.

Pandemic-era support is winding down

For business owners navigating daily pressures, the excitement of starting a new business can quickly give way to the challenge of keeping that business financially sustainable. Rising operating costs, tight labor conditions and the winding down of pandemic-era government assistance have created additional pressure for businesses across Oklahoma.

Erik-Michael Collins, senior managing director of the Oklahoma Small Business Exchange, said businesses of different sizes are experiencing the effects of those pressures.

"Luckily there are a lot of programs that have startup funds and grants that you don't have to pay back, but after a while, that money dries up," Collins said. "It's usually a fixed amount. If that money is not spent wisely, that can lead, of course, to bankruptcies."

Based on forums and roundtables hosted by the Oklahoma Small Business Exchange since its formation in 2023, Collins said members have described a business climate where top-line revenues are increasingly being consumed by rising input prices and tight labor conditions.

Collins said workforce dynamics have introduced another source of instability. A wave of experienced workers has left traditional payroll positions to pursue independent ventures, leaving established companies competing for a smaller pool of skilled labor. To fill those vacancies, employers may need to offer higher wages, which can also increase related expenses such as employee insurance premiums.

Businesses are also facing higher costs for raw materials and inventory. Collins said passing those expenses on to customers has become increasingly difficult as households respond to higher living expenses, utility bills and housing costs by reducing discretionary spending.

During the COVID-19 pandemic, forgivable loans and targeted subsidies helped keep many businesses afloat. As those pandemic-era financial cushions disappear, businesses that remain dependent on those resources may face additional financial pressure.

Higher interest rates add another layer of pressure

Interest rates have also played a significant role in the financial challenges facing businesses.

Ross Plourde, a shareholder and practice group leader with Oklahoma City-based law firm McAfee & Taft who represents commercial debtors, said sustained higher interest rates can affect businesses across a wide range of industries.

"That's been the classic driver of business bankruptcies," Plourde said. "They borrow a lot of money, then interest rates go up and they can't service the debt."

Plourde said an individual rate increase may not be enough to force a company into insolvency, but the broader shift from historically low interest rates to a sustained higher-rate environment has made it more difficult for some businesses to refinance existing obligations.

Bankruptcy filings can also be triggered by unexpected external events, including prolonged commercial litigation, the loss of major customer accounts and unresolved lease disputes between commercial tenants and landlords that originated during the pandemic.

Understanding bankruptcy options

Navigating federal bankruptcy court can require business owners to confront legal and structural issues that are frequently misunderstood. A Harvard Business School study cited in the article found that many people hold factually inaccurate views about the bankruptcy process, with misconceptions potentially causing business owners to underestimate the relief and options available to them.

Plourde, who primarily represents corporate debtors in Chapter 11 and Subchapter V small-business cases, said Chapter 7 liquidation rarely serves a practical purpose for incorporated businesses.

Businesses seeking to reorganize under Chapter 11 while allowing existing owners to retain equity can face more complicated legal requirements. Among them is the absolute priority rule, which governs how creditors are treated before existing equity holders can retain their ownership interest, unless creditors consent to a different arrangement.

"A lot of business owners look at Chapter 11 bankruptcy as, 'OK, well, we can go in and get rid of all the debt. We don't have to worry about it anymore,'" Plourde said. "And again, that's a little bit harder to accomplish."

Another potential risk for small-business owners is the use of personal guarantees. Even when a business is organized as a limited liability company or corporation, owners may remain personally responsible for obligations they have personally guaranteed, including certain loans, leases or other financing arrangements.

Oklahoma's entrepreneurial ecosystem remains active

Despite the rise in business bankruptcy filings, Collins said Oklahoma's entrepreneurial ecosystem continues to have structural strengths that can help businesses get started and grow. He pointed to the state's relatively low overhead, SCORE mentorship chapters and active SBA lending networks as resources available to Oklahoma entrepreneurs.

The state's business landscape therefore presents two realities at once: Oklahoma continues to see substantial interest in entrepreneurship and new business formation, while existing businesses are navigating higher costs, tighter margins and more expensive debt.

Collins and Plourde both emphasized the importance of recognizing financial distress before cash reserves are exhausted.

"Start early," Plourde said. "A lot of times, by the time they get to us, it's a deal where I wish you would have called yesterday."

Original Source: Jeff Elkins - The Oklahoman