HOUSTON — The Lone Star State was bumped out of the top spot on a list of best states to start a small business, according to a new study.
Lendio revealed the results of the new study this week and now ranks Florida as the top state with Texas and North Carolina coming in second and third. According to the study, these three topped the list due to lower taxes, a population influx, business funding, and higher amounts of personal consumption expenditures.
According to the Small Business Administration, 2023 was a record-breaking year with 5.5 million new business applications being filed.
Lindio said the rankings were based on an analysis of 10 metrics from government and nonprofit sources and Lendio's internal data including startup survival rates, access to business financing, favorable tax environments, and cost of living.
Colorado, South Carolina, Ohio, Georgia, Massachusetts, Utah, and Oklahoma also made the top 10 list. Most of the top 10 stayed the same with some shifts in the line-up.
What makes Texas a great place to start a small business?
According to the study, while Texans receive a lower amount of SBA loan approvals per 100,000 residents than other states, they were the seventh highest state for loans offered through Lendio’s marketplace.
Of all businesses started in 2017 in the state, more than half survived five years of operations, outlasting those in many other states, the study said.
According to Census Bureau data, more than 400,000 people with at least some college education moved into Texas in 2022, making it a prime location for educated entrepreneurs to spread their wings. Texas has also become one of the most popular places for Americans to relocate, thanks, in part, to its lack of a state income tax.
So how did Florida top Texas in the rankings?
According to the study, Florida is the best state to start a business due to a low corporate tax rate of 5.5% and the mass migration of consumers and companies to the state.
Florida also saw more than half of its startup businesses survive for at least five years. They also are the top recipient for SBA loan dollars.
10 best states to start a small business
Here is the full list below and the full report.
- Florida
- Texas
- North Carolina
- Colorado
- South Carolina
- Ohio
- Georgia
- Massachusetts
- Utah
- Oklahoma
