Americans are turning to entrepreneurship at near record levels despite a tough business environment.
The small business boom shows no signs of abating.
Americans keep turning to entrepreneurship at near record levels. So far this year, 3.02 million new business applications have been filed--a level outpacing eight of the past ten years and just under the all-time highs recorded in 2021 and 2023.
On a monthly basis, 420,802 new business applications were filed in July, according to the U.S. Census Bureau. That marks a 2.1 percent decrease from this time last year. Still, the monthly average of 443,000 new startups remains 92 percent higher than the pre-pandemic norm, and the Biden administration is taking a victory lap on the historic uptick.
"Over the past four years more entrepreneurs than ever before have pursued the American dream of business ownership," said SBA Administrator Isabel Casillas Guzman in a statement with the release. "The SBA has been committed to matching this incredible wave of enthusiasm with the capital, market access, and resources small businesses need to start, grow, and thrive."
Since President Biden took office, 19 new million businesses have formed. Typically, between 7 and 9 percent of businesses shutter each year, but that closure rate has been trending downward recently. Of the 33.3 million small businesses nationwide, 917,825 businesses--or 2.8 percent--shut down and 1.4 million new establishments opened between March 2021 and March 2022.
The environment for these new startups has not been an easy one. While inflation has fallen below 3 percent for the first time in more than three years, cost pressures remain the most pressing problem for business owners. In an effort to fight that inflation, the Federal Reserve has kept interest rates high, squeezing credit availability. Banks continue to tighten loan standards, especially for small businesses, and report weakening demand, according to the Fed's Senior Loan Officer Opinion Survey. Entrepreneurs are getting fed up with their lenders with an increasing amount saying they are not satisfied with the terms and amounts offered.
More entrepreneurs are turning to the SBA for help with financing. The federal agency has already approved 58,849 small business loans this year, up from 57,362 last year and 51,856 in 2021 when President Biden took office. At the same time, the average loan size has fallen from $704,581 in 2021 to $479,685 in 2023 and now to $433,590 this year.
The entrepreneurs getting more money from the SBA include some of the groups that often face barriers to financing, including Black, Latino and woman-owned businesses. The number of loans to women and Latino business owners has about doubled on a monthly basis while lending to Black-owned businesses has tripled.
Source: https://www.inc.com/