San Francisco identified as “The Best City for Small Businesses”

Tech hubs continue to thrive. Newcomers to the Top 25 list include Pittsburgh, Milwaukee, Kansas City and Las Vegas.

San Francisco as the “Best Small Business City in America” ​​based on average annual income, credit scores, company age, and Biz2Credit’s proprietary BizAnalyzer score, which takes into account costs including real estate, labor costs, and taxes.

The Annual Assessment of Small Business Financial Performance in Major U.S. Markets examined the financial performance of more than 50,000 small and medium-sized business loan applications nationwide for the entire previous year (2022). The analysis looked at companies with less than 250 employees or less than $10 million in annual revenue.

Last year’s top city, San Jose, dropped to seventh this year, while No. 2 Baltimore dropped out of the top 10. In addition, four cities on last year’s ranking fell completely off last year’s list (last year’s ranking in parathesis): Lakeland, FL (16); Port St. Lucie, Florida (18); Houston (20); and Cleveland (23).

This year’s ranking included several metropolitan areas that were not among the Top 25 Cities for Small Business last year: Pittsburgh (nominal No. 10), Milwaukee, Kansas City and Las Vegas.

Factors that determine the ranking include the local business climate, including rents, labor costs and local tax rates. Biz2Credit examined the finances of more than 50,000 companies that applied small business loans and financing in 2022.

According to Biz2Credit’s research, the Top 10 Best Cities for Small Business in 2022 were:

1. San Francisco, California
2. Sacramento, California
3. San Diego, California
4. New York, New York
5. Boston, MA
6. Los Angeles, CA
7. San Jose, California
8. Portland, OR
9. Seattle, WA
10. Pittsburgh, Pennsylvania

Technology hubs, such as San Francisco, San Jose, Boston, New York and Seattle, scored high as the technology sector boomed in 2022, despite layoffs at some major companies. The tech boom is fueling other industries, including real estate, construction, logistics, food and lodging. It is a case of a rising tide that floats all boats.”

Overall, weighted average earnings for small businesses increased from $376,000 in 2021 to $441,000 in the 12 months of 2022. Average credit scores for business owners also increased from 633 in 2021 to 642. These indicators reflect how the small business economy has recovered since the pandemic.

The Top 25 Cities for Small Business Overall this year are:

Rank 2023 (Rank 2022)

1. San Francisco, CA (5)
2. Sacramento, CA (12)
3. San Diego, CA (11)
4. New York, NY (3)
5. Boston, MA (4)
6. Los Angeles, CA (6)
7. San Jose, California (1)
8. Portland, OR (8)
9. Seattle, WA (14)
10. Pittsburgh, PA (unranked)
11. Denver, Colorado (10)
12. Washington, D.C. (7)
13. Riverside, CA (22)
14. Baltimore, Maryland (2)
15. Milwaukee, WI (unranked)
16. Kansas City, MO (unranked)
17. San Antonio, Texas (24)
18. Austin, Texas (17)
19. Philadelphia, Pennsylvania (25)
20. Providence, RI (9)
21. 21. Tampa, FL (15)
22. Nashville, Tennessee (21)
23. Orlando, FL (19)
24. Las Vegas, NV (unranked)
25. Miami, Florida (13)

Interestingly, the new cities on the list are relatively cheap cities, rather than expensive places like San Francisco, San Jose, New York and Boston. The cost structures in places like Pittsburgh, Milwaukee and Kansas City are much more affordable than in larger metropolitan areas.”

The Top 10 metropolitan areas of Annual sales goods:

1. San Francisco: $870,000
2. San Jose: $827,000
3. Austin, Texas: $755,000
4. New York: $701,000
5. Los Angeles: $696,000
6. Denver: $682,000
7. Sacramento: $682,000
8. Baltimore: $672,000
9. Boston: $661,000
10. San Antonio: $660,000

Cities with large technology sectors are the ones with the highest revenues. All cities in the top 10 averaged above $660,000.

Also examined the Biz2Credit analysis Era of business (in months), an indication of the startup activity. The No. 1 spot with the youngest age was Milwaukee (55 months).

The age of the company is an indication of entrepreneurship and growth of new businesses. Our analysis found that businesses are springing up in places like Milwaukee, Birmingham, AL, and Greenville, SC, which have not previously made the Biz2Credit list of Best Cities for Small Businesses.

When sorted by creditworthinesstech hubs like San Francisco, Seattle and New York had the highest numbers. The national average was 642, up from last year’s average credit score of 633, based on submissions on Biz2Credit’s platform.

1. San Francisco: 660
2. Seattle: 657
3. New York: 656
4. Boston: 655
5. Los Angeles: 654
6. Providence, RI: 653
7. San Jose: 652
8. Denver: 649
9. Sacramento: 647
10. Portland: 647

Despite inflation, many small businesses did well in 2022, and their owners’ rising credit scores reflect that.

The metro areas with the Most small business loan applications in 2022 were:

1. New York
2. Atlanta
3. Miami
4. Los Angeles
5. Chicago
6. Houston
7. Dallas
8. Philadelphia
9. Orlando
10. phoenix

The top 10 cities with the youngest Age of Business (in months) were:

1. Milwaukee (55)
2. Birmingham, Alabama (56)
3. Philadelphia (56)
4. San Jose(57)
5. Detroit (58)
6. Denver (58)
7. Austin, Texas (58)
8. Greenville, SC (58)
9. Sacramento (59)
10. Oklahoma City (59)

While the overall economy is still strong, small business owners nevertheless face unprecedented challenges. The labor market is tight, cities are still recovering from the effects of the pandemic, inflation continues and the Federal Reserve announced another rate hike on May 3. interest this year.

click here to view the full Best Small Business Cities research.