Silicon Valley isn’t just for corporate giants; San Jose is the best city for small businesses

Although known as the home of some of the largest and most successful corporations in the country (Amazon, Cisco, eBay, PayPal, Adobe and others), San Jose is the “Best Small Business City in America,” according to 2021 average annual revenue, credit scores, business age and BizAnalyzer score owned by Biz2Credit. It’s the second year in a row that San Jose has come out on top in Biz2Credit’s annual rankings.

Biz2Credit influences the local business climate, including rents, labor costs and local tax rates by examining the finances of more than 82,000 businesses that applied for small business loans in 2021, including businesses that apply for PPP loans.

According to Biz2Credit’s new study, the top 10 cities for small businesses in 2021 were: San Jose, Baltimore, New York, Boston, San Francisco, Los Angeles, Washington, DC, Portland, OR, Providence, RI and Denver.

With Silicon Valley thriving, it’s no surprise that San Jose has repeated as #1 on the 25 Best Small Business Cities for 2021. Other tech hubs, including New York, Boston and San Francisco, also fared well.

Baltimore and Washington, DC rose dramatically on the list, which is likely the result of an increase in the number of companies serving the growing federal workforce. Among the top 10 metropolitan areas, the leading industries were: professional, scientific and technical services; Retail trade; and construction

Overall, median annual income for small businesses in 2021 fell to $539,000 from $689,000 in 2020. This reflects the impact of the economic toll that the coronavirus took on small businesses, many of which had to close due to pandemic mitigation efforts.

Average credit scores for business owners decreased from 617 in 2020 to 604 in 2021. Clearly, the pandemic had an impact on credit scores.

In addition, some companies that benefited from PPP money in 2020 did not receive it in 2021. As operations resumed after shutdowns related to COVID-19, the cost of doing business increased, which which hurt businessmen’s credit scores.

For this analysis, Biz2Credit defined “small businesses” as businesses with fewer than 250 employees or less than $10 million in annual revenue. The 25 best cities for small businesses in 2021 are:

Classification 2021 (Ranking 2020)

1. San Jose (1)

2. Baltimore (13)

3. New York (7)

4. Boston (5)

5. San Francisco-Oakland (6)

6. Los Angeles (4)

7. Washington, DC (12)

8. Portland (16)

9. Providence, RI (Unranked)

10. Denver (14)

11. San Diego (3)

12. Sacramento (10)

13. Miami-Ft. Lauderdale (2)

14. Seattle (9)

15. Tampa-St. Pete (8)

16. Lakeland-Winter Haven, FL (Unranked)

17. Austin, TX (Unranked)

18. Port St. Lucie, FL (unrated)

19. Orlando (11)

20. Houston (unranked)

21. Nashville (Unrated)

22. Riverside, CA (21)

23. Cleveland (Unranked)

24. San Antonio (24)

25. Philadelphia (17)

Seven cities ranked among Biz2Credit’s top 25 cities for small businesses unranked in 2020: Providence, RI; Lakeland-Winter Haven, FL; Austin, TX; Port St. Lucie, FL; Houston; Nashville; and Cleveland.

The pandemic showed many entrepreneurs, especially those who own technology companies and other businesses that can operate virtually, that they didn’t need to be in big cities. That’s why cities like Providence, Lakeland-Winter Haven and Port St. Lucie were part of the list.

Meanwhile, seven cities in the new Biz2Credit Top 25 ranking for 2020 left off the list (2020 rankings in parentheses): Raleigh (15), St. Louis (18), Charlotte (19), Chicago (20), Minneapolis-St. Paul (22), Detroit (23) and Phoenix (25).

The 10 best metropolitan areas for Annual income*

1 Fresno, CA: $821,720

2 San Francisco: $661,241

3 San Diego: $611,083

4 Port St. Lucie, FL: $608,148

5 Denver: $603,712

6 New York: $577,173

7 Boston: $558,627

8 Austin, TX: $528,877

9 Portland: $519,757

10 San Jose: $509,485

* Average annual income measured during the year 2021

Revenues dropped significantly for small businesses. In last year’s study, companies in San Jose, Miami, New York, Seattle and San Diego had average annual revenues of more than $1 million. A year later, in 2021, no city in Biz2Credit’s ranking had a median income above $825,000.

It appears that small businesses in 2021 were dealing with restrictions related to COVID, consumer fear of going out, and the emergence of the Omicron variant, which hit late in the year, just as restaurants and entertainment venues they were starting to recover.

The metropolitan areas with the Higher number of small business loan applications in 2021 they were:

1. Saint Joseph

2. Baltimore

3. New York

4. Boston

5. San Francisco

6. Los Angeles

7. Washington, DC

8. Portland

9. Providence

10. Denver

Biz2Credit’s analysis has also been examined It was business (in months), an indication of initial activity. There were several newcomers in 2021, including Fresno, CA; Tulsa, OK; Columbus, OH; Lakeland-Winter Haven, FL; and Memphis, TN. The top 10 cities with the youngest business age (in months) were:

1. Kansas City: 42

Omaha: 42

Denver: 42 (tie)

4. Fresno, CA: 43

Memphis: 43

Columbus, OH: 43 (tie)

Lakeland-Winter Haven, FL: 43 (tie)

Washington, DC: 43 (tie)

Tulsa, OK: 43 (tie)

10. Riverside, CA: 44

Pittsburgh: 44 (those)

Seattle: 44 (tie)

Grand Rapids, MI: 44 (tie)

Baltimore: 44 (tie)

Miami: 44 (tie)

The pandemic showed many entrepreneurs, especially those who own technology-based companies, that they didn’t need to be in big cities. That’s why we see Midwestern cities like Kansas City, Omaha, Columbus, Pittsburgh, and Grand Rapids on the list of youngest companies, which is a sign of new startups.

When sorted by Credit scoretech hubs such as San Jose, New York, San Francisco and Boston were shown to be among the cities with the highest FICO scores.

1. Providence: 618

2. Saint Joseph: 617

New York: 617 (tie)

4. Boston: 614

5. San Francisco: 610

6. Los Angeles: 609

Seattle: 609 (tie)

8. Sacramento: 608

9. Portland: 607

Washington, DC: 607 (tie)

Average credit scores dropped significantly in 2021. For example, in last year’s study, top-ranked San Jose came out on top with an average score of 650, and No. 10 Tampa it was ranked 629.

This year, the city with the highest average credit score was Providence at 618, a number that wouldn’t have made the top 10 in 2020.

There’s no doubt that 2021 was a tough year for countless small businesses. COVID shook every facet of the economy and many businesses are still recovering. However, companies involved in industries such as technology that did not require face-to-face interactions did better due to fears about the pandemic. Also, entrepreneurs chose to go to other cities in places like Florida, where the weather is nice and the land is (comparatively) cheaper.

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