41 Insightful Small Business Statistics for 2020

Small business statistics help us to better understand the recent and current state of small businesses in the U.S. Use these stats to make informed decisions about your business. Or, if you haven’t started your business, include them in your business plan. We’ve updated this list with several small business stats including the recent effects of COVID-19 on the marketplace.

Growth & Survival Stats

1. The U.S. had a record number of business applications in Q2 of 2020, with 883,174.

Source: Census

This number of applications was a jump of 4.3% from Q1 to Q2. Overall, the South has seen the largest jump in business formation (11.6%), and the North has seen a contraction (-8.4%).

2. Around 47% of small business owners say their revenue will decrease over the next 12 months.

Source: Statista

This survey was conducted in July 2020. If the economy improves, we may see this number decrease—if the economy deteriorates, we may see this number increase.

3. As of 2020, there are 31.7 million small businesses in the U.S.

Source: SBA

This accounts for 99.9% of U.S. businesses. Now, keep in mind that 25.7 million of these businesses have no employees—many are very small and part time.

4. Quality of labor is the most important issue for small business owners.

Source: Statista

21% of small businesses state this concern about labor. 18% say tax rates are their most significant issue. 14% say government regulation and red tape is the most pressing issue in their business, and 13% say low sales.

5. About one in 12 businesses close every year.

Source: SBA

The top reason businesses close is low sales (25%). Personal choice accounts for several other reasons, including retiring (22%), and selling the firm (20%).

6. Roughly 50% of small businesses will survive five years or more.

Source: BLS

This statistic is based on data from the past 25 years. Approximately one-third will survive 10 years or more.

7. Around 48% of small businesses with employees are registered as an S corporation.

Source: SBA

Businesses without employees are overwhelmingly sole proprietorship (86%). Larger enterprises are overwhelmingly C corporations (82%). If you plan on having employees, consider starting your business as an S-corp for favorable tax purposes.

COVID-19 Statistics

8. Since COVID-19 began, about one in four businesses report increasing the use of online platforms to offer goods and services.

Source: Census Small Business Pulse

Coronavirus has forced many businesses to adopt online platforms for the first time. You see restaurants adopting online ordering platforms, such as Uber Eats and DoorDash. It has been necessary for many small retailers to embrace ecommerce as well.

9. Around 17% of businesses report COVID-19 has had little impact on their business—6% report a positive impact.

Source: Census Small Business Pulse

While coronavirus has negatively impacted the vast majority of small businesses (76%), some have thrived. Many factors go into a business’s success. We’ve seen a growing demand in home improvement and pet product related business.

10. The city that reports the most considerable adverse effect of COVID-19 is NYC—the lowest is Salt Lake City.

Source: Census Small Business Pulse

Coronavirus has not affected all cities the same. Many businesses in cities that are less densely populated have had fewer business closures than those in densely populated cities.

11. 75% of small businesses applied for the Payment Protection (PPP) loan program.

Source: Census Small Business Pulse

The vast majority of small businesses with employees were eligible for the program, and many applied.

12. The SBA approved 4.88 million PPP loans—totaling over $521 billion.

Source: SBA PPP Report

People have been debating whether the PPP loan program was a success. However, the simple fact that a government successfully provided $521 billion in relief over a period of a few months to millions of businesses is impressive.

13. The average PPP loan size is approximately $107,000.

Source: SBA PPP Report

While the maximum PPP loan amount was $10 million, the vast majority of loans were small amounts to cover two and a half months of payroll, utilities, and rent.

14. Roughly 43% of small businesses had to close temporarily due to COVID-19.

Source: PNAS

Business closures may have been due to government mandate or voluntary such as a COVID-19 outbreak among employees.

Finance Statistics

15. Around 17% of small businesses say they would close if they experienced a two-month revenue loss.

Source: Fed Small Business

To make up any revenue loss, 47% of business owners said they would use personal funds. 37% said they would reduce employees’ salaries, and 34% said they would take out debt.

16. 59% of small business owners would use a personal guarantee as collateral to secure debt.

Source: Fed Small Business

This financing decision is mostly because the typical small business has little business assets. When available, 49% of owners would use business assets to secure debt.

17. Big banks approved around 26.9% of small business loans.

Source: Biz2Credit

Smaller banks have a much higher approval rate, around 50.2%. Alternative lenders approved 56.7% of business loan requests. This discrepancy may be due to larger banks accepting more unqualified applications than smaller and alternative banks.

18. The average SBA loan amount from large national banks is $59,000 and is $165,000 from small national or regional banks.

Source: ValuePenguin

This data includes industrial and commercial loans. For alternative lenders, the average loan amount ranges from $50,000 to $80,000.

19. In 2019, small businesses borrowed $28 billion from the Small Business Administration.

Source: SBA Financial Report

The $28 billion was loaned through 58,000 loans in the 7(a) and 504 programs. The loans helped support approximately 550,000 American jobs.

20. The median income for self-employed individuals at their incorporated business was $51,816 in 2018.

Source: ACS

For unincorporated businesses (sole proprietors), the median reported income was $26,084. Keep in mind that this data includes part-time business owners.

Women in Business Statistics

21. Between 2014 to 2019, the number of women-owned businesses grew by 21% to 13 million.

Source: American Express

Compare the percent growth of women-owned businesses to all businesses, which only grew by 9%.

22. From 2019 to 2020, women saw a 4% increase in small business ownership.

Source: Guidant Financial

According to Guidant’s survey of 3,100 business owners, 27% of businesses were owned by women.

23. 1.7% of women-owned businesses generated more than $1 million in revenue—a 46% increase over the past 11 years.

Source: WBENC

The overall increase of $1 million revenue businesses during the past 11 years was only 12%.

24. Woman-owned businesses generate $1.9 trillion in revenue.

Source: American Express

This revenue total is a 21% growth from 2015 to 2019.

25. Women are significantly more likely to launch businesses in the healthcare and educational sectors than men.

Source: WBENC

In contrast, men are more likely to create businesses in construction and manufacturing (12%) than women (4%).

Minority-Owned Business Statistics

26. There are 5.2 million self-employed minorities in the U.S.

Source: SBA

Overall, around 6% of the minority population in the United States own their own business.

27. Women of color own 47% of all women-owned businesses.

Source: WBENC

They employ 2.2 million people and generated $387 billion in revenue in 2018.

28. From 2014 to 2019, businesses owned by women of color grew 43%.

Source: American Express

Within that 43%, Black-owners’ businesses grew the fastest at 50%, Native Hawaiian and Pacific grew 41%, and Hispanic-owned grew 40%.

29. Black women account for 2.7% of all businesses owned.

Source: SBA

This ownership level is an increase from 1.8% in January 2010. However, this level is a decrease of the pre-COVID high of 3.1%.

30. Due to COVID-19, Black-owned businesses saw a decrease of 18.4% since July 2019.

Source: SBA

This decrease is the largest of any minority, and higher than the average of 7.3%. Hispanic-owned businesses saw the lowest decrease in business ownership, 2.7%.

Marketing Statistics

31. 40% of small businesses currently don’t have a website.

Source: Visual Objects

This percentage matches a similar study done by Clutch. One of the reasons the number is so high is because many sole proprietors work part time and get customers through word-of-mouth.

32. Around 50% of online traffic is from mobile devices in the U.S.

Source: Statista

Small business owners need to consider their customers’ mobile website experience, not just the computer-based experience. Mobile usage has seen significant growth from about 25% of U.S. online traffic in 2015.

33. Businesses post on average three to four times a week on social media.

Source: HubSpot

Many new business owners wonder how many times they should post on social media each week. Depending on the platform and if social media is a crucial marketing strategy for your business, you may want to increase the frequency of posts.

34. Nearly 50% of small businesses spend $10,000 or less on digital marketing each year.

Source: Clutch

25% of small businesses spent between $10,001 and $100,000. 13% spent upward of $500,000.

35. 61% of businesses say that improving search engine optimization and online presence is a top marketing priority.

Source: HubSpot

Other top priorities include blog content, marketing automation, and better content distribution.

Small Business Employee Statistics

36. Small businesses employ 60.6 million people.

Source: SBA

This number makes 47.1% of the working population. 1.6 million net small business-related jobs were added in 2019.

37. Employees say the best part of working for a small business is feeling like a family.

Source: Aflac Small Business Happiness Survey

Employees overwhelmingly voted (32%) that the best perk of working for a small business is the family atmosphere. 14% said it was a greater ability to make an impact, and 14% said a greater appreciation of their work.

38. 64% of employees say working for a small business is less stressful than a large business.

Source: Aflac Small Business Happiness Survey

On that same note, 87% of employees said working for a small business was more fun than working for a large company.

39. For the first time in eight years, small business owners say they will decrease staff at a higher percentage than those who are increasing staff.

Source: Statista

This small business stat from Q2 in 2020 is an unfortunate result primarily driven by COVID-19. The more optimistic point of view is that 62% of businesses plan to keep staff at the current level.

40. In 2019, small business owners who say recruiting and retaining employees is a top issue increased by 22%.

Source: Guidant Financial

There are several reasons why small business owners struggle with finding employees. One is that the unemployment rate (pre-COVID) was very low, and the supply of workers was small. The other main reason is the lack of training, particularly in the skilled-trade industries.

41. About half of small businesses (47%) offer benefits to employees.

Source: Clutch

Of the small businesses that provide benefits, 69% offer health benefits, 52% offer retirement plans, and 48% provide family leave.

Bottom Line

Use these small business statistics to understand the small business sector better. Overall, small businesses were growing at a rapid and historic pace until the COVID-19 lockdowns, and social distancing effects took place in March. We will update this article as new information and stats are released.