A comprehensive analysis of Small Business Administration data reveals significant disparities in small business recovery across the United States, with 24 states experiencing fewer small business workers in 2025 compared to 2022 levels.
The study, which examined four years of federal data tracking small business openings, closures, and employment figures, provides the first state-by-state ranking of small business growth patterns since the COVID-19 pandemic disrupted the economy. The complete rankings and methodology show stark contrasts between states that have rebounded strongly and those still struggling to regain pre-pandemic employment levels.
Small businesses, which employ nearly half of America’s private workforce, have faced unprecedented challenges since 2020. The new analysis reveals that while some states have experienced robust growth in small business activity, others continue to lag behind, despite the broader economic recovery.
The research methodology incorporated multiple factors beyond simple business counts, including the ratio of new business openings to closures and changes in small business employment over the four-year period. This comprehensive approach provides a more nuanced picture of each state’s small business ecosystem health.
States in the Mountain West and Southeast regions generally performed better in the rankings, while several Northeastern and Midwestern states showed concerning declines in small business employment. The data suggests that states with lower regulatory burdens and growing populations tended to rank higher in overall small business growth metrics.
The employment figures are particularly significant as they indicate not just the number of businesses operating, but their actual economic impact and ability to create jobs. A state might show an increase in business registrations while simultaneously experiencing a decline in small business employment, suggesting that new ventures are operating with leaner staff or that established businesses are reducing their workforces.
Founder Reports compiled the rankings using a weighted formula that balanced new business formation rates against closure rates while giving substantial weight to employment changes. This approach helps identify states where small businesses are not just surviving but thriving and expanding their operations.
The timing of the analysis is crucial as policymakers debate various economic support measures and consider how best to foster entrepreneurship and small business growth. Understanding which states have successfully supported their small business communities could provide valuable insights for those still working to improve conditions for entrepreneurs.
For entrepreneurs considering where to launch or expand their businesses, these state rankings offer critical data about the relative health and trajectory of small business environments across the country. The findings suggest that geographic location remains a significant factor in small business success, with some states providing notably more favorable conditions for growth and employment expansion than others.