Rising Small Business Applications in 2024
Small business startup applications in the U.S. are experiencing a significant surge this year, according to a recent report by the U.S. Treasury. This increase is occurring as sentiment within the sector improves following a challenging post-pandemic period, driven in part by easing inflation.
Record-Breaking Application Numbers
The analysis reveals that the U.S. is seeing an average of 430,000 new business applications each month in 2024. This figure marks a 50% increase compared to the average in 2019, the last full year before the COVID-19 pandemic. Notably, applications for businesses that are likely to hire employees have increased to 140,000 per month, a 30% rise from 2019.
Small Businesses Leading Job Growth
Since 2019, small businesses have been pivotal in job creation, providing approximately 70% of net new jobs in America, a rise from 64% in the previous business cycle. This highlights the crucial role small businesses play in the economic landscape.
Addressing Startup Costs and Lending Challenges
Currently, the deduction limit for startup costs is set at $5,000, although the average cost of starting a business is around $40,000. To support small businesses, particularly in minority and underserved communities, the U.S. Treasury, under the leadership of Secretary Janet Yellen, has facilitated over $8 billion in investments through the Emergency Capital Investment Program. This initiative aims to provide more lending resources to these communities.
Government Support and Economic Policies
Vice President Harris emphasized the administration's commitment to small businesses, describing them as "the backbone of our communities." Since the start of the administration, there have been 19 million new small business applications, including significant growth in overlooked and underserved areas, thanks to historic investments and initiatives.
Improved Small Business Sentiment
Several indicators show improved sentiment among small businesses. The Small Business Optimism Index of the National Federation of Independent Business has rebounded to its highest level since February 2022. Similarly, the U.S. Chamber of Commerce Small Business Index reached a post-pandemic high during the second quarter of 2024. Though tight lending conditions persist, the easing of lending standards is contributing to the increased optimism within the sector.
These developments underscore a positive turnaround for small businesses in the U.S., supported by a combination of policy measures and improving economic conditions.
