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

Although known as the headquarters of some of the largest and most successful corporations in the country (Amazon, Cisco, eBay, PayPal, Adobe and others), San Jose is “America’s Best Small Business Town according to average annual earnings. in 2021, credit ratings, company age, and Biz2Credit’s exclusive BizAnalyzer score. This is the second year in a row that San Jose has topped Biz2Credit’s annual rankings.

Biz2Credit takes into account the local business climate, including local rents, labor costs and tax rates when reviewing the finances of over 82,000 businesses that have applied small business loans in 2021, including companies that have applied for PPP loans.

According to new Biz2Credit research, 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 booming, it’s no surprise that San Jose has repeated itself as No. 1 among the top 25 cities for small businesses for 2021. Other tech hubs, including New York, Boston and San Francisco, also fared well.

Baltimore and Washington, DC have increased the list significantly, 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 top industries were: 1) professional, scientific and technical services, 2) retail trade and 3) construction.

Overall, average annual small business revenues in 2021 have fallen from $689,000 in 2020 to $539,000. This reflects the impact of the economic toll the coronavirus has had on small businesses, many of which have had to close due to pandemic mitigation efforts.

Average business owner credit scores have fallen from 617 in 2020 to 604 in 2021. Clearly, the pandemic has had an impact on credit scores.

Additionally, some businesses that benefited from PPP money in 2020 did not receive it in 2021. As operations resumed after COVID-related shutdowns, the cost of doing business increased, which hurt the credit ratings of business owners.

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

2021 Ranking (2020 Ranking)

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, D.C. (12)

8.Portland (16)

9. Providence, RI (unranked)

10. Denver (14)

11. San Diego (3)

12. Sacrament (10)

13. Miami-Ft. Lauderdale (2)

14.Seattle (9)

15. Tampa-St. Stone (8)

16. Lakeland-Winter Haven, Florida (unranked)

17. Austin, Texas (unranked)

18. Port St. Lucie, FL (Unrated)

19. Orlando (11)

20. Houston (unranked)

21. Nashville (Unranked)

22. Riverside, CA (21)

23. Cleveland (Unranked)

24. San Antonio (24)

25. Philadelphia (17)

Seven cities made Biz2Credit’s Top 25 “Best Cities for Small Businesses”. unranked in 2020: Providence, RI; Lakeland-Winter Haven, Florida; Austin, TX; Port St. Lucie, Florida; Houston; Nashville; and Cleveland.

The pandemic has shown many entrepreneurs — especially those who own tech companies and other businesses that can operate virtually — that they don’t need to be in big cities. That’s why cities like Providence, Lakeland-Winter Haven, and Port St. Lucie make the list.

Meanwhile, seven cities feature in Biz2Credit’s new Top 25 rankings for 2020 removed from 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 Top 10 metropolitan areas by Annual revenue*

1 Fresno, CA: $821,720

2 San Francisco: $661,241

3 San Diego: $611,083

4 Port St. Lucie, Florida: $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 turnover measured in 2021

Revenues have dropped significantly for small businesses. In last year’s study, businesses in San Jose, Miami, New York, Seattle and San Diego averaged more than $1 million in annual revenue. A year later, in 2021, no city in the Biz2Credit ranking had average incomes above $825,000.

It seems that small businesses in 2021 were facing COVID-related restrictions, consumer fear of going out, and the emergence of the Omicron variant, which hit at the end of the year, just when the restaurants and entertainment venues were beginning to rebound.

Metropolitan areas with Most small business loan applications in 2021 were:

1. San Jose

2. Baltimore

3. New York


5. San Francisco

6.Los Angeles

7.Washington, D.C.


9. Providence


Biz2Credit’s analysis also examined business age (in months), an indication of startup activity. There were several newcomers in 2021, including Fresno, CA; Tulsa, okay; Columbus, Ohio; Lakeland-Winter Haven, Florida; 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, Ohio: 43 (tie)

Lakeland-Winter Haven, Florida: 43 (tie)

Washington, DC: 43 (tie)

Tulsa, Oklahoma: 43 (tie)

10. Riverside, CA: 44

Pittsburgh: 44 (tie)

Seattle: 44 (tie)

Grand Rapids, Michigan: 44 (tie)

Baltimore: 44 (tie)

Miami: 44 (tie)

The pandemic has shown many entrepreneurs — especially those who own tech companies — that they don’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 business start-ups.

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

1. Providence: 618

2. San Jose: 617

New York: 617 (tie)

4. Boston: 614

5. San Francisco: 610

6. LA: 609

Seattle: 609 (tie)

8. Sacrament: 608

9. Portland: 607

Washington, DC: 607 (tie)

Average credit scores have 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 10th-ranked Tampa was at 629.

This year, the city with the highest average credit score was Providence at 618, a number that would not have cracked the top 10 in 2020.

There’s no doubt that 2021 has been a tough year for countless small businesses. COVID has rocked all facets 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 fared better due to pandemic fears. In addition, entrepreneurs have chosen to go to other cities such as Florida, where the weather is nice and the land is (comparatively) cheaper.

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