There is a reason why governments prefer large companies, don't like small companies, and discourage starting one. If a large company employs 1000 persons, they only need to speak to 1 person to collect taxes on all 1000. It would be a problem, if they had to collect them from each individual person one by one, from all 1000. Large companies make life easier to them. So, they discourage people from being self-employed or create small companies. One way to do that, is to punish them harshly if they fail.
The biggest problem that the government has, is that their policy is actually working. Nobody wants to start a new company. With old companies gradually becoming outdated and disappearing, that is not such a good thing. So, now they want to encourage people to do something that they also discourage them from doing.