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Cities With the Largest Increase in New Business Applications Since COVID

Published on: 02/07/2022

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.

Chart1 New business apps hit record levels after initial COVID-19 shutdowns

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.

Chart2 Retail showed the largest uptick in new business apps during COVID-19

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.

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Chart3 Southeastern states reported largest increase in new biz apps in 2020

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 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.

Chart4 Small midsize metros with the most new business applications

Large Metros With the Most New Business Applications

Jacksonville, Florida
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 application in 2019: 23,665

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Fresno, California
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 application 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 application 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 application 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 application 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 application 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 application 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 application 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 application 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 application 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 application in 2019: 103,364

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Cleveland, Ohio
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 application 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 application 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 application 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 application 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).

Written on February 7, 2022

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