Small business growth in 2026 is not evenly distributed across the United States. Some states are seeing strong business formation, while others are experiencing a more complicated pattern: more businesses launching, but fewer small business jobs being created.
Between January 2022 and March 2025, our research team compiled and analyzed small business growth data across all 50 U.S. states and the District of Columbia. We examined Small Business Administration state profiles, U.S. Census Bureau business dynamics statistics, and Bureau of Labor Statistics employment data covering 36.2 million small businesses nationwide.
This report presents growth rankings based on three weighted factors:
- Total business count growth – 25%
- Employee growth – 50%
- Net business creation rates – 25%
Our analysis reveals significant regional variations in small business expansion, with Western states demonstrating the strongest post-pandemic recovery, while nearly half of all states experienced declining small business employment despite increases in total business formations.
1. Top States for Small Business Growth
The table below ranks the 25 states with the strongest small business growth between 2022 and 2025, based on our composite scoring methodology that prioritizes employment creation alongside business formation.
Top state growth rankings: Business count growth, employee growth, and net business creation
The Top 25 States for Small Business Growth: 2026
| Rank | State | Total Business Growth (%) | Employee Growth (%) | Net Business Creation Rate (%) |
|---|---|---|---|---|
| 1 | Utah | 14.4% | 10.3% | 5.2% |
| 2 | Delaware | 13.8% | 8.9% | 4.7% |
| 3 | Idaho | 12.9% | 11.2% | 5.1% |
| 4 | Nevada | 15.1% | 8.7% | 6.7% |
| 5 | Florida | 17.2% | 6.2% | 5.8% |
| 6 | Georgia | 14.7% | 5.8% | 5.3% |
| 7 | South Carolina | 13.9% | 6.4% | 4.9% |
| 8 | Arizona | 16.3% | 4.9% | 5.7% |
| 9 | North Carolina | 13.2% | 5.6% | 4.8% |
| 10 | Tennessee | 12.8% | 5.9% | 4.6% |
| 11 | Montana | 11.7% | 7.2% | 4.2% |
| 12 | Wyoming | 10.9% | 6.8% | 4.1% |
| 13 | South Dakota | 11.4% | 6.3% | 3.9% |
| 14 | Texas | 14.2% | 3.8% | 5.1% |
| 15 | District of Columbia | 12.1% | 5.2% | 4.3% |
| 16 | Washington | 15.6% | 2.7% | 6.1% |
| 17 | Arkansas | 10.8% | 4.9% | 3.7% |
| 18 | New Jersey | 11.3% | 3.6% | 4.2% |
| 19 | Virginia | 11.7% | 3.4% | 4.1% |
| 20 | Alabama | 10.4% | 4.2% | 3.6% |
| 21 | Colorado | 13.8% | 1.9% | 4.9% |
| 22 | New Hampshire | 9.7% | 4.8% | 3.4% |
| 23 | Rhode Island | 9.2% | 4.6% | 3.3% |
| 24 | Maine | 8.9% | 4.7% | 3.2% |
| 25 | Vermont | 8.6% | 4.5% | 3.1% |
According to the data, Western states dominate the top 10, claiming six of the top positions. Utah leads with balanced growth across all metrics—14.4% business growth paired with exceptional 10.3% employee expansion. Idaho achieved the highest employee growth in the nation at 11.2%, indicating businesses are not only launching but scaling successfully. Nevada posted the strongest net business creation rate at 6.7%, meaning the gap between openings and closures far exceeded that of other states. Florida stands as the only large-population state with over 10 million residents to crack the top five, demonstrating that scale and growth are not mutually exclusive when community support for local businesses remains strong.
2. Small Business Employment: The Hidden Story Behind Growth
While business formation numbers paint an optimistic picture, employment data reveal a concerning paradox. Nearly half of all states experienced negative small business employee growth between 2022 and 2025, even as total business counts increased.
Employment growth comparison: Top employment gainers and largest employment declines
Small Business Employment Growth: Top 15 vs. Bottom 10 States: 2026
| State | Small Business Employees (2025) | Employment Change (%) | Jobs Added/Lost |
|---|---|---|---|
| Top Employment Gainers | |||
| Idaho | 428,000 | +11.2% | +43,000 |
| Utah | 892,000 | +10.3% | +83,000 |
| Delaware | 247,000 | +8.9% | +20,000 |
| Nevada | 734,000 | +8.7% | +58,000 |
| Montana | 298,000 | +7.2% | +20,000 |
| Wyoming | 171,000 | +6.8% | +11,000 |
| South Carolina | 1,240,000 | +6.4% | +75,000 |
| South Dakota | 252,000 | +6.3% | +15,000 |
| Florida | 3,800,000 | +6.2% | +344,000 |
| Tennessee | 1,710,000 | +5.9% | +95,000 |
| Georgia | 2,650,000 | +5.8% | +145,000 |
| North Carolina | 2,480,000 | +5.6% | +131,000 |
| District of Columbia | 198,000 | +5.2% | +10,000 |
| Arkansas | 712,000 | +4.9% | +33,000 |
| Arizona | 1,820,000 | +4.9% | +85,000 |
| Largest Employment Declines | |||
| Hawaii | 347,000 | -7.7% | -29,000 |
| New York | 5,120,000 | -4.9% | -264,000 |
| West Virginia | 382,000 | -4.9% | -20,000 |
| New Mexico | 456,000 | -3.8% | -18,000 |
| Louisiana | 1,030,000 | -3.2% | -34,000 |
| Oregon | 1,070,000 | -2.8% | -31,000 |
| Minnesota | 1,550,000 | -2.4% | -38,000 |
| Illinois | 2,400,000 | -2.2% | -73,000 |
| Connecticut | 936,000 | -2.1% | -20,000 |
| Iowa | 856,000 | -1.9% | -17,000 |
The data displays that the employment paradox becomes strikingly clear in this data. Illinois added 8.7% more small businesses but lost 2.2% of its small business workforce—73,000 jobs disappeared despite thousands of new company formations. New York experienced the largest absolute job loss at 264,000 positions, a 4.9% decline, ranking it 50th nationally despite being the nation’s fourth-largest economy. Hawaii leads employment contraction at 7.7%, suggesting businesses are starting leaner or downsizing existing operations. This pattern indicates a fundamental shift toward solo entrepreneurship and micro-businesses with minimal hiring, creating what economists call “jobless business growth.” For communities seeking to celebrate thriving local businesses, employment metrics matter more than formation counts alone.
3. Industry-Specific Growth Leaders by State
Different states excel in different sectors. Our analysis of Census Bureau industry data reveals which states lead small business growth within key industries.
Industry growth leaders: Leading states, growth rates, business counts, and runner-up states
Small Business Growth by Industry and Leading States: 2026
| Industry Sector | Leading State | Growth Rate (%) | Number of Small Businesses | Runner-Up State |
|---|---|---|---|---|
| Professional, Scientific, and Technical Services | Utah | 18.2% | 156,000 | Colorado |
| Construction | Florida | 16.9% | 487,000 | Texas |
| Health Care and Social Assistance | Idaho | 15.7% | 42,000 | Utah |
| Accommodation and Food Services | Nevada | 14.3% | 89,000 | Florida |
| Retail Trade | Arizona | 13.8% | 124,000 | Georgia |
| Transportation and Warehousing | Texas | 17.4% | 612,000 | Florida |
| Administrative and Support Services | Delaware | 16.1% | 38,000 | Nevada |
| Other Services (except Public Administration) | Montana | 12.9% | 47,000 | Wyoming |
| Real Estate and Rental and Leasing | Florida | 19.3% | 276,000 | Nevada |
| Arts, Entertainment, and Recreation | Tennessee | 11.8% | 54,000 | North Carolina |
The data reveals that Florida dominates three major sectors: construction, real estate, and accommodation/food services. This mainly reflects sustained population migration and tourism recovery. Utah and Idaho demonstrate diversified growth across high-value professional services and healthcare sectors, explaining their superior employee growth rates compared to states focused on lower-wage service industries. Texas leads transportation and warehousing with 612,000 small businesses in the sector, capitalizing on its central logistics position and booming e-commerce fulfillment needs. Nevada’s strength in accommodation and food services at 14.3% growth signals tourism sector recovery, though these industries typically offer lower wages and seasonal employment. States with growth concentrated in professional services show stronger revenue performance, as detailed in our small business revenue by industry analysis.
4. Business Formation Momentum: Monthly New Business Rates
Beyond cumulative growth, monthly formation rates reveal which states maintain consistent entrepreneurial momentum. Our analysis examined average monthly business formations and bankruptcy ratios across all states.
Formation momentum benchmarks: Monthly business formations, growth since 2022, and formation-to-bankruptcy ratios
Monthly Small Business Formation Rates: Top 20 States: 2026
| Rank | State | Monthly Business Formations (Avg.) | % Growth Since 2022 | Formation-to-Bankruptcy Ratio |
|---|---|---|---|---|
| 1 | Washington | 14,495 | +78.4% | 1,847:1 |
| 2 | Florida | 48,200 | +42.7% | 2,103:1 |
| 3 | Texas | 52,800 | +38.9% | 1,654:1 |
| 4 | Montana | 3,420 | +28.6% | 2,289:1 |
| 5 | Oregon | 7,680 | +26.8% | 1,432:1 |
| 6 | Wyoming | 4,937 | +23.7% | 2,576:1 |
| 7 | Alaska | 2,150 | +23.5% | 1,891:1 |
| 8 | California | 78,300 | +21.4% | 1,258:1 |
| 9 | Nevada | 8,420 | +20.9% | 2,147:1 |
| 10 | Idaho | 5,680 | +19.8% | 2,312:1 |
| 11 | Arizona | 15,200 | +18.7% | 1,967:1 |
| 12 | Colorado | 14,800 | +17.3% | 1,823:1 |
| 13 | Utah | 9,870 | +16.9% | 2,198:1 |
| 14 | Georgia | 18,900 | +16.2% | 1,756:1 |
| 15 | North Carolina | 16,500 | +15.8% | 1,834:1 |
| 16 | Tennessee | 12,400 | +15.1% | 1,921:1 |
| 17 | South Carolina | 8,750 | +14.6% | 1,889:1 |
| 18 | Delaware | 3,240 | +13.8% | 2,067:1 |
| 19 | New Jersey | 12,900 | +12.7% | 1,543:1 |
| 20 | Virginia | 13,600 | +11.9% | 1,678:1 |
The data indicates that Washington state experienced an explosive 78.4% growth in monthly formations, jumping from 8,120 to 14,495 new businesses per month—the highest acceleration in the nation. Wyoming boasts the strongest formation-to-bankruptcy ratio at 2,576:1, meaning for every business filing bankruptcy, 2,576 new ones launch, demonstrating exceptional entrepreneurial resilience. Florida and Texas combine volume and growth, averaging 48,200 and 52,800 monthly formations, respectively, with both states exceeding 2,000:1 formation-to-bankruptcy ratios. Business bankruptcies nationally dropped by nearly half since 2004, from 35,998 to just 19,251 in 2025, indicating improved access to capital and better survival rates. Nominating and celebrating successful local businesses becomes easier when failure rates decline and entrepreneurial culture strengthens.
5. Regional Demographics: Ownership Diversity Across America
Small business ownership demographics vary significantly by region, reflecting local population composition, economic opportunity access, and historical patterns of entrepreneurship.
Regional ownership patterns: Women-owned businesses, minority-owned businesses, and rural vs. urban business shares
Regional Small Business Demographics and Characteristics: 2026
| Region | Top 3 States | Women-Owned (%) | Minority-Owned (%) | Rural Business Share (%) | Urban Business Share (%) |
|---|---|---|---|---|---|
| Mountain West | Utah, Idaho, Montana | 41.2% | 18.7% | 22.3% | 77.7% |
| Southeast | Florida, Georgia, South Carolina | 44.8% | 34.6% | 14.2% | 85.8% |
| Southwest | Nevada, Arizona, Texas | 43.5% | 41.2% | 11.8% | 88.2% |
| Mid-Atlantic | Delaware, New Jersey, Virginia | 46.1% | 38.9% | 8.4% | 91.6% |
| Pacific Northwest | Washington, Oregon | 47.3% | 27.4% | 13.7% | 86.3% |
| Great Plains | South Dakota, Wyoming, Nebraska | 39.8% | 12.3% | 28.6% | 71.4% |
| South Central | Tennessee, Arkansas, Alabama | 42.7% | 29.1% | 19.5% | 80.5% |
| New England | New Hampshire, Maine, Vermont | 45.9% | 15.8% | 17.2% | 82.8% |
According to the data findings, the Pacific Northwest leads women-owned business representation at 43%, outpacing the national workforce participation rate of 46.9%. The Southwest region demonstrates the highest minority business ownership at 41.2%, driven by substantial Hispanic entrepreneurship in Arizona, Nevada, and Texas.
The Great Plains maintain the highest rural business concentration at 28.6%, nearly triple the urban-dominated Mid-Atlantic region at 8.4%. Women own approximately 43-47% of all small businesses nationally and operate 12.7 million nonemployer businesses. Regional demographic patterns influence voting behaviors in community business recognition campaigns, as ownership diversity often correlates with category participation rates.
6. Requesting a Copy of This Report
If you would like to request a PDF copy of this report or learn more about how Voted Number One helps communities discover and celebrate exceptional local businesses through authentic voting campaigns, you can reach out here.
Sources
- 2025 Small Business Profiles for the States, Territories, and Nation — U.S. Small Business Administration Office of Advocacy, Washington, DC, June 2025, https://advocacy.sba.gov/2025/06/30/2025-small-business-profiles-for-the-states-territories-and-nation/
- States With the Fastest Small Business Growth — Founder Reports Analysis of SBA Data (2022-2025), August 2025, https://founderreports.com/small-business-growth-by-state/
- 54 Small Business Statistics for 2025 — The Kaplan Group, March 2026, https://www.kaplancollectionagency.com/business-advice/54-small-business-statistics-for-2025/
- State Small Business Statistics 2025 — Dataset — U.S. Small Business Administration, Washington, DC, January 2026, https://data.sba.gov/en/dataset/state-small-business-statistics-2025
- United States 2025 State Profile — SBA Office of Advocacy, Washington, DC, June 2025, https://advocacy.sba.gov/wp-content/uploads/2025/06/United_States_2025-State-Profile.pdf
- Business Dynamics Statistics — U.S. Census Bureau, Washington, DC, 2025
- Nonemployer Statistics by Demographics — U.S. Census Bureau, Washington, DC, 2025