Photo Credit: GaudiLab / Shutterstock
The COVID-19 pandemic has been particularly hard on small businesses, which are estimated to employ nearly half of all American workers. A recent Federal Reserve Bank study noted that the pandemic caused an additional 200,000 businesses to close their doors last year, with small businesses comprising the bulk of the difference.
However, it hasn’t been all bad news for the nation’s small businesses. A real-time survey of business applications conducted by the U.S. Census Bureau offers encouraging results: the increase in business shutdowns combined with changes in consumer preferences created gaps for new entrants to fill, resulting in a strong resurgence of new businesses. Between 2019 and 2020, there was a nearly 25% increase in new business applications, and that increase has held relatively steady through 2021. About one-third of current applications are considered “high-propensity applications,” or those with a high likelihood of turning into a business with payroll.
At the industry level, the increase in new business applications is being led by the retail trade sector of the economy. When comparing the number of applications from 2019 to 2020, retail trade applications increased by 59%, followed by the transportation sector which increased nearly 35%. Further, the largest percentage increases in applications were more likely to occur in those sectors already generating the highest number of applications overall. Together, this indicates the start of a robust trend for total small business creation in the economy.
While total business applications grew markedly since the beginning of the pandemic, the strongest increases appeared in the Southeast. Mississippi, Georgia and Louisiana lead the nation with application increases of over 55%. Yet, not all states fared well, as Alaska and North Dakota each saw small, single-digit percentage decreases over the same time period. At the metro level, those reporting the largest increases in new business applications are also found in the Southeast, with a handful of locations in Texas and the Midwest also ranking highly.
The data used in this analysis is from the U.S. Census Bureau. To determine the locations with the largest increase in new business applications since COVID-19, researchers at Self Financial calculated the percentage change in new business applications from 2019 to 2020. In the event of a tie, the location with the higher total change in business applications from 2019 to 2020 was ranked higher.
Here are the metropolitan areas with the largest increase in new business applications since the start of the pandemic.
Large Metros With the Most New Business Applications
Photo Credit: CHARLES MORRA / Shutterstock
15. Jacksonville, FL
- Percentage change in business applications (2019-2020): +31.8%
- Total change in business applications (2019-2020): +7,537
- Total business applications in 2020: 31,202
- Total business applications in 2019: 23,665
Photo Credit: stellamc / Shutterstock
14. Fresno, CA
- Percentage change in business applications (2019-2020): +32.1%
- Total change in business applications (2019-2020): +1,782
- Total business applications in 2020: 7,332
- Total business applications in 2019: 5,550
Photo Credit: Jon Bilous / Shutterstock
13. Riverside-San Bernardino-Ontario, CA
- Percentage change in business applications (2019-2020): +32.2%
- Total change in business applications (2019-2020): +10,944
- Total business applications in 2020: 44,887
- Total business applications in 2019: 33,943
Photo Credit: Gang Liu / Shutterstock
12. Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
- Percentage change in business applications (2019-2020): +33.4%
- Total change in business applications (2019-2020): +25,103
- Total business applications in 2020: 100,265
- Total business applications in 2019: 75,162
Photo Credit: Sherry V Smith / Shutterstock
11. Virginia Beach-Norfolk-Newport News, VA-NC
- Percentage change in business applications (2019-2020): +35.0%
- Total change in business applications (2019-2020): +6,683
- Total business applications in 2020: 25,783
- Total business applications in 2019: 19,100
Photo Credit: Sean Pavone / Shutterstock
10. Birmingham-Hoover, AL
- Percentage change in business applications (2019-2020): +35.3%
- Total change in business applications (2019-2020): +4,070
- Total business applications in 2020: 15,593
- Total business applications in 2019: 11,523
Photo Credit: Sean Pavone / Shutterstock
9. Charlotte-Concord-Gastonia, NC-SC
- Percentage change in business applications (2019-2020): +35.3%
- Total change in business applications (2019-2020): +11,879
- Total business applications in 2020: 45,487
- Total business applications in 2019: 33,608
Photo Credit: nektofadeev / Shutterstock
8. Houston-The Woodlands-Sugar Land, TX
- Percentage change in business applications (2019-2020): +37.4%
- Total change in business applications (2019-2020): +32,185
- Total business applications in 2020: 118,183
- Total business applications in 2019: 85,998
Photo Credit: f11photo / Shutterstock
7. Milwaukee-Waukesha, WI
- Percentage change in business applications (2019-2020): +37.6%
- Total change in business applications (2019-2020): +5,773
- Total business applications in 2020: 21,127
- Total business applications in 2019: 15,354
Photo Credit: f11photo / Shutterstock
6. Detroit-Warren-Dearborn, MI
- Percentage change in business applications (2019-2020): +48.9%
- Total change in business applications (2019-2020): +26,947
- Total business applications in 2020: 82,098
- Total business applications in 2019: 55,151
Photo Credit: Oleg Podzorov / Shutterstock
5. Chicago-Naperville-Elgin, IL-IN-WI
- Percentage change in business applications (2019-2020): +49.7%
- Total change in business applications (2019-2020): +51,394
- Total business applications in 2020: 154,758
- Total business applications in 2019: 103,364
Photo Credit: f11photo / Shutterstock
4. Cleveland-Elyria, OH
- Percentage change in business applications (2019-2020): +54.5%
- Total change in business applications (2019-2020): +11,302
- Total business applications in 2020: 32,045
- Total business applications in 2019: 20,743
Photo Credit: f11photo / Shutterstock
3. New Orleans-Metairie, LA
- Percentage change in business applications (2019-2020): +55.6%
- Total change in business applications (2019-2020): +10,659
- Total business applications in 2020: 29,830
- Total business applications in 2019: 19,171
Photo Credit: ESB Professional / Shutterstock
2. Atlanta-Sandy Springs-Alpharetta, GA
- Percentage change in business applications (2019-2020): +56.8%
- Total change in business applications (2019-2020): +73,365
- Total business applications in 2020: 202,603
- Total business applications in 2019: 129,238
Photo Credit: Sean Pavone / Shutterstock
1. Memphis, TN-MS-AR
- Percentage change in business applications (2019-2020): +77.7%
- Total change in business applications (2019-2020): +11,554
- Total business applications in 2020: 26,431
- Total business applications in 2019: 14,877
Detailed Findings & Methodology
The data used in this analysis is from the U.S. Census Bureau’s Business Formation Statistics. To determine the locations with the largest increase in new business applications since COVID-19, researchers calculated the percentage change in business applications from 2019 to 2020. In the event of a tie, the location with the higher total change in business applications from 2019 to 2020 was ranked higher. To improve relevance, only metropolitan areas with at least 100,000 residents were included. Additionally, metros were grouped into cohorts based on population size: small (100,000–349,999), midsize (350,000–999,999), and large (1,000,000 or more).
