It’s often said that small businesses are at the heart of the U.S. economy, but most people don’t fully understand the numbers behind that statement. Find out more about how small businesses continue to shape the economy of the United States.
U.S. economy overview
The U.S. economy has been in a state of uncertainty over the last several years. In addition to inflationary concerns, many U.S. citizens are also dealing with wage stagnation. The country’s housing market, which has a significant impact on multiple aspects of the economy, has also been in a state of flux as mortgage interest rates continue to fluctuate.
While these conditions certainly aren’t ideal for small businesses, entrepreneurs continue to find ways to launch and sustain businesses, even in the face of adversity. In fact, 94% of small business owners expect to see growth in 2026.
How many businesses are there?
There are two types of small businesses in the United States. Nonemployer companies, which make up the majority of them, are those with no employees on payroll. These businesses are typically owned and operated by owners who not only run the firm but also do all of the work. There are also income thresholds to consider to be classified as a nonemployer business. Companies under this heading have annual business receipts of $1,000 or more and are subject to federal income taxes. Conversely, employer firms have employees.
As of February 2026, there are 36,207,130 small businesses in the U.S., a figure that represents 99.9% of US companies. Of those companies, 29,811,495 have no employees.
Demographics
- 47% of small business owners in the U.S. are between 46 and 61 years of age.
- 77% of small business owners are male.
- 44% of small business owners have a bachelor’s degree while 27% have a Master’s.
- 21% of American small businesses are owned by minorities.
- The most popular states for small business owners are Texas (10%), Florida (9%), California (9%), and Georgia (6%).
Industries
It’s interesting to see how diverse the industries are in which small businesses operate. As of January 2026, the most popular industries for small businesses were:
- Retail: 16%
- Food/Restaurants: 13%
- Health and Beauty/Fitness: 12%
- Residential & Commercial Services: 9%
- Construction: 8%
- Business Services: 7%
- Lodging/Hospitality: 6%
- Education: 5%
- Manufacturing: 5%
How small businesses contribute to the economy
The small business community contributes to the overall financial health of the United States in three main ways. In addition to driving innovation, creating jobs, and helping entrepreneurs achieve financial independence, there are tangible financial benefits provided by small businesses.
According to studies, small businesses make up 43.5% of the United States’ GDP. Additionally, small businesses pay 38.7% of private sector payroll in the United States.
Over the last 25 years, small businesses have accounted for 66% of employment growth.
State-by-state
Want more detailed information about your state? Visit the SBA website here. It shows the latest federal data, giving snapshots of small business health and economic activity. Answers are given to the following questions:
- How many small businesses are in my state?
- How many jobs do they create?
- Which industries have the most small businesses and small business jobs?
- How many establishments opened and closed?
- How many small businesses export, and how much?
- Which counties have the most small business employment?
How small businesses use SBA loans to grow
Credit cards and lines of credit are popular choices for small businesses that need an influx of funds. However, an SBA loan is also a great option. Specifically, SBA 7(a) loans are the most popular type of SBA loan, thanks largely to their low interest rates, long repayment terms, and low monthly payment obligations. In 2025, the SBA provided 85,000 SBA 7(a) and 504 loans, for a total of $45 billion.
Ready to grow?
If you’re a small business owner with plans to expand, a low-cost SBA loan may be your best bet to grow your business and save money. Find out if you pre-qualify!
FAQs
What percentage of all U.S. businesses are considered small businesses?
Small businesses make up the vast majority of all businesses in the United States. According to the U.S. Small Business Administration, about 99.9% of all U.S. businesses are classified as small businesses.
How many small businesses have employees versus no employees?
A significant portion of small businesses in the U.S. operate without employees. These are often referred to as nonemployer businesses and include freelancers, independent contractors, and sole proprietors. Roughly 82% of small businesses fall into this category while the remaining 18% have employees.
Which industries have the highest number of small businesses in the U.S.?
Retail, restaurants, and health and beauty are the most popular industries for small business owners in the US. Other popular industries include construction, manufacturing, and lodging.
How has the number of small businesses changed over time?
The number of small businesses in the U.S. has generally increased over time, although growth has not always been linear. Economic cycles, policy changes, and external events can influence business formation and closures.
Why are small businesses important to the U.S. economy?
Small businesses play a critical role in driving economic growth and innovation. They create jobs, contribute to local economies, and foster competition across industries. In many communities, small businesses are key to economic stability and development.
