The Best Cities for New Small Businesses (Infographic)

A new study looks at where young businesses are thriving.

February 26, 2020 2 min read

Starting a business is an inherently risky endeavor, especially when headlines and statistics tout findings that around 20 percent of small businesses fail within the first year and 50 percent within five years. But those prospects can change dramatically based on where you headquarter your business.

A recent study from online business loan site LendingTree found that certain cities in the U.S. are better places to start new small businesses than others. To determine the rankings, LendingTree looked at the data it has from companies applying for loans and studied the percentages of businesses that were profitable, the percentage less than six years old, the percentage with less than $1 million in revenue and the percentage with fewer than 250 employees across U.S. metro areas.

The city that took the top spot? Seattle, where more than 95 percent of businesses have fewer than 250 employees. Around 70 percent earn less than $1 million in revenue, and 71 percent are profitable.

The biggest surprise on the list is the state that dominated the top 10: Florida. Maybe thanks in part to business-friendly tax policies and relatively low cost of living, three cities in Florida made the top 10 ranking. Here’s the complete list:

Seattle
Denver
Tampa, Fla.
Miami
Portland, Ore.
Atlanta
Orlando, Fla.
Los Angeles
New York
Minneapolis

A fourth Florida city, Jacksonville, barely missed the top 10 with its eleventh-place ranking. Results suggested that, comparably, the “worst” cities to start a business were Birmingham, Ala., Hartford, Conn. and Memphis, Tenn., where big corporations dominate.

See the below infographic and the complete study for more information on the top three cities on the list and what makes a city friendly to new small businesses.