Small Business Statistics 2026
By Axis Intelligence Research
Co-author: Mia Scarlett (Business Expert) | Last updated: August 2, 2026 | License: CC BY 4.0
Americans filed 531,423 business applications in June 2026 alone. The Census Bureau projects that 29,741 of them will carry a payroll within four quarters. That ratio — 5.6 percent — is the least-quoted and most important number in American small business, and it explains why a country with 36.2 million small businesses adds only about 155,000 net establishments a year.
Quick Answer
The United States contains 36.2 million small businesses, employing 62.3 million people, or 45.9 percent of the private workforce, according to the SBA Office of Advocacy’s 2025 Small Business Profile. Only 6.37 million of those firms have any employees at all; the other 29.8 million are one-person operations. According to Axis Intelligence Research, just 5.6 percent of business applications filed in June 2026 are projected to become employer businesses within a year, and 51.0 percent of new establishments survive five years — a figure that has barely moved across eleven consecutive opening cohorts.
Key Findings
- According to Axis Intelligence Research, the Axis Employer Conversion Rate (AECR) stood at 5.6 percent in June 2026 — 29,741 projected employer formations against 531,423 business applications, or roughly one in eighteen (U.S. Census Bureau, Business Formation Statistics, released July 9, 2026).
- Axis Intelligence Research finds that five-year establishment survival has held between 50.1 percent and 51.9 percent for eleven consecutive opening cohorts — those opening in the years ended March 2010 through March 2020 — with a mean of 51.0 percent (Bureau of Labor Statistics, Business Employment Dynamics, Table 7, data through March 2025).
- According to Axis Intelligence Research, small firms employ 45.9 percent of American workers but account for only 38.7 percent of private payroll — an Axis Small Business Payroll Gap of 84.3 percent, meaning average annual pay at a small firm is $55,663 against $66,019 economy-wide (Axis calculation from U.S. Census Bureau Statistics of U.S. Businesses 2022, via SBA Office of Advocacy).
- Forty-six percent of small employer firms reported using AI, but only 7 percent of those users had fully integrated it — meaning fully integrated AI reaches about 3.2 percent of small employer firms (Federal Reserve Banks, 2026 Report on Employer Firms, March 3, 2026).
- 82.4 percent of American small businesses have no employees whatsoever — 29,811,495 of 36,186,089 firms (U.S. Census Bureau Nonemployer Statistics 2022 and Statistics of U.S. Businesses 2022, via SBA Office of Advocacy).
How Many Small Businesses Are There in the U.S. in 2026?
The SBA Office of Advocacy’s 2025 Small Business Profile puts the count at 36,186,089 — 99.9 percent of all U.S. businesses. That is the number every roundup quotes. It is also the number that most badly misleads anyone trying to reason about the American business population, because it merges two categories that behave nothing alike.
Small business count by employment size, 2022
| Size class | Businesses | Share of all small businesses | Source |
|---|---|---|---|
| No employees (nonemployer) | 29,811,495 | 82.4% | Census Nonemployer Statistics 2022 |
| 1–19 employees | 5,720,093 | 15.8% | Census SUSB 2022 |
| 20–499 employees | 654,501 | 1.8% | Census SUSB 2022 |
| All small businesses | 36,186,089 | 100.0% | SBA Office of Advocacy, 2025 Profile |
Shares are Axis Intelligence Research calculations from the source counts, which sum exactly to the published total.
Read that first row again. More than four in five American “small businesses” are a single person with an EIN — a freelance designer, a rideshare driver, a landlord with a rental LLC. Only 6,374,594 firms — 17.6 percent — have a payroll. Those employer firms represent 99.7 percent of U.S. employer establishments, which is the definition the Federal Reserve uses when it surveys small business credit conditions.
Mia Scarlett, Business: Every headline that says “36.2 million small businesses” is quoting a number that is 82 percent sole proprietors. That’s not a criticism of the SBA’s count — it’s the correct count under a statutory definition that stops at 500 employees. But it means the phrase “small business” carries two entirely different balance sheets. A nonemployer firm has no payroll line, no workers’ comp exposure, and typically no bank debt. A 40-person manufacturer has all three. When a trade group says small business is struggling, ask which of those two it is talking about, because the answer changes the policy.
How Many New Businesses Are Started Each Year?
The Census Bureau’s Business Formation Statistics counts EIN applications, and the June 2026 release (published July 9, 2026) recorded 531,423 seasonally adjusted business applications — up 1.1 percent from May.
Business applications, June 2026 (seasonally adjusted)
| Series | June 2026 | Change vs. May 2026 | Source |
|---|---|---|---|
| Total business applications | 531,423 | +1.1% | Census BFS |
| High-propensity applications | 149,714 | +1.9% | Census BFS |
| With planned wages | 35,695 | +0.3% | Census BFS |
| From corporations | 43,346 | +5.5% | Census BFS |
| Projected formations within 4 quarters | 29,741 | +0.7% | Census BFS |
| Projected formations within 8 quarters | 41,042 | +1.3% | Census BFS |
An application is not a business. It is a request to the IRS for a tax ID, and the Census Bureau tracks separately how many of those requests ever generate a first payroll tax liability.
The Axis Employer Conversion Rate (AECR)
Axis Intelligence Research computes the AECR as projected employer formations within four quarters divided by total business applications in the same month:
AECR = PBF4Q ÷ BA = 29,741 ÷ 531,423 = 5.60%
Extending the window to eight quarters raises it to 7.7 percent (41,042 ÷ 531,423). Restricting the denominator to the Census Bureau’s own “high-propensity” subset — applications from corporations, or indicating planned wages, or in industries with historically high transition rates — lifts the conversion to 19.9 percent (29,741 ÷ 149,714).
Three readings, one conclusion: the American business formation boom is overwhelmingly a boom in non-employer entities. Only 28.2 percent of June’s applications even qualified as high-propensity, and only 6.7 percent indicated planned wages.
This is an estimate, not an observation. The four-quarter and eight-quarter formation figures are Census Bureau econometric projections, because actual payroll confirmation lags by roughly a year; the Bureau notes that administrative data currently confirms employer startup activity only through the fourth quarter of 2023. The AECR inherits that uncertainty and should be read as a directional ratio, not a settled count.
Mia Scarlett: A 5.6 percent conversion rate is not a failure signal, and anyone who reports it that way has misread the instrument. It’s a composition signal. The EIN is now a routine administrative step for gig income, single-property LLCs, and side businesses that were never going to hire. The number worth watching is applications with planned wages: 35,695 in June, against 531,423 total. That series is the one that tells you whether anyone intends to sign a paycheck, and it grew 0.3 percent while corporate applications grew 5.5 percent. Formation is up. Hiring intent is flat.
Which Industries Are People Starting Businesses In?
Retail trade led June 2026 applications outright, and by a wide margin over professional services.
Business applications by industry, June 2026 (seasonally adjusted)
| Industry | Applications | Change vs. May 2026 | Source |
|---|---|---|---|
| Retail trade | 97,096 | +2.0% | Census BFS |
| Professional, scientific & technical services | 82,990 | +1.3% | Census BFS |
| Construction | 48,933 | +0.8% | Census BFS |
| Other services | 44,314 | +0.9% | Census BFS |
| Administrative & support | 36,909 | ~0.0% | Census BFS |
| Transportation & warehousing | 34,512 | +3.1% | Census BFS |
| Health care & social assistance | 33,436 | −0.7% | Census BFS |
| Accommodation & food services | 28,777 | +2.6% | Census BFS |
| Real estate | 26,565 | +1.1% | Census BFS |
| Finance & insurance | 19,512 | +0.9% | Census BFS |
| Arts & entertainment | 15,204 | −0.8% | Census BFS |
| Information | 12,999 | +4.7% | Census BFS |
| Wholesale trade | 9,061 | −3.1% | Census BFS |
| Educational services | 8,345 | +0.2% | Census BFS |
| Manufacturing | 7,424 | +3.1% | Census BFS |
Chart 1 — Business applications by industry, June 2026. Source: U.S. Census Bureau, Business Formation Statistics, July 9, 2026.
The regional split ran South 236,198, West 132,134, Midwest 88,533, Northeast 74,558. The South alone accounted for 44.4 percent of national applications in June.
Compare that flow against the existing stock. The largest small business populations by count are professional, scientific and technical services (4,881,738 firms), transportation and warehousing (4,089,883), other services (3,860,519), construction (3,656,782), and real estate and rental and leasing (3,510,689). Transportation’s position in that list is almost entirely nonemployer: 3,854,720 of its 4,089,883 firms have no employees.
What Is the Small Business Failure Rate?
This is where most published statistics go wrong, usually by quoting a 20-year-old rule of thumb. The Bureau of Labor Statistics tracks actual establishment cohorts from the quarter they open until they close, and the data runs through March 2025.
Survival of the March 2020 opening cohort
| Years since opening | Surviving establishments | Survival rate | Avg. employment of survivors | Source |
|---|---|---|---|---|
| 0 (March 2020) | 767,573 | 100.0% | 4.0 | BLS BED Table 7 |
| 1 (March 2021) | 621,249 | 80.9% | 4.8 | BLS BED Table 7 |
| 2 (March 2022) | 554,747 | 72.3% | 5.9 | BLS BED Table 7 |
| 3 (March 2023) | 488,169 | 63.6% | 6.7 | BLS BED Table 7 |
| 4 (March 2024) | 439,219 | 57.2% | 7.2 | BLS BED Table 7 |
| 5 (March 2025) | 394,689 | 51.4% | 7.7 | BLS BED Table 7 |
Chart 2 — Survival curve, establishments opening in the year ended March 2020. Source: U.S. Bureau of Labor Statistics, Business Employment Dynamics, Table 7.
Note the last column. Survivors are not merely hanging on; average employment nearly doubles over five years, from 4.0 to 7.7. Survival and growth are the same selection process viewed from two angles.
The Axis Five-Year Survival Band
Axis Intelligence Research examined five-year survival for every consecutive opening cohort with a complete five-year window in the current BLS series — establishments opening in the years ended March 2010 through March 2020, eleven cohorts in all.
| Opening cohort (year ended March) | 5-year survival rate | Source |
|---|---|---|
| 2010 | 51.1% | BLS BED Table 7 |
| 2011 | 50.9% | BLS BED Table 7 |
| 2012 | 50.1% | BLS BED Table 7 |
| 2013 | 50.6% | BLS BED Table 7 |
| 2014 | 50.8% | BLS BED Table 7 |
| 2015 | 50.2% | BLS BED Table 7 |
| 2016 | 50.7% | BLS BED Table 7 |
| 2017 | 51.6% | BLS BED Table 7 |
| 2018 | 51.9% | BLS BED Table 7 |
| 2019 | 51.5% | BLS BED Table 7 |
| 2020 | 51.4% | BLS BED Table 7 |
Band: 50.1%–51.9% · Spread: 1.8 percentage points · Mean: 51.0%
Chart 3 — Five-year survival by opening cohort, 2010–2020. Source: U.S. Bureau of Labor Statistics, Business Employment Dynamics, Table 7. Axis Intelligence Research calculation.
The cohort that opened in the year ended March 2020 — the one whose first twelve months contained the pandemic shutdowns — reached 51.4 percent at five years. The 2015 cohort, which faced nothing remotely comparable, reached 50.2 percent. The pandemic did not change the five-year survival rate of American establishments. It changed which businesses died and when, and it produced the highest opening counts on record, but the eventual five-year outcome landed inside a band that has held for more than a decade.
First-year survival is more volatile, and worse than the folklore suggests:
| Opening cohort (year ended March) | Establishments opened | 1-year survival | Source |
|---|---|---|---|
| 2019 | 770,523 | 79.2% | BLS BED Table 7 |
| 2020 | 767,573 | 80.9% | BLS BED Table 7 |
| 2021 | 839,297 | 79.1% | BLS BED Table 7 |
| 2022 | 1,065,228 | 76.3% | BLS BED Table 7 |
| 2023 | 1,049,106 | 78.2% | BLS BED Table 7 |
| 2024 | 988,310 | 77.9% | BLS BED Table 7 |
| 2025 | 980,333 | not yet available | BLS BED Table 7 |
Roughly 22 percent of establishments do not reach their first anniversary. The 2022 cohort — the largest on record at 1,065,228 openings — had the weakest first year of the group at 76.3 percent, which is what you would expect from a cohort inflated by marginal entrants.
Ten-year survival, for the record: the cohort opening in the year ended March 2015 stood at 34.7 percent in March 2025.
Mia Scarlett: I want to be careful with the disagreement here, because it’s the useful part. The widely repeated claim that “half of small businesses fail in the first five years” is directionally correct and has been for fifteen years — the BLS band is 50.1 to 51.9 percent surviving, so roughly half do close. What’s wrong is the second half of the claim, the part where somebody adds “and it’s getting worse.” It isn’t. Eleven cohorts, a 1.8-point spread, straight through a recession and a pandemic. If you’re writing a business plan, the five-year coin flip is a planning constant, not a headwind. The variable you actually control shows up in the first twelve months, where the range across recent cohorts is 76.3 to 80.9 percent.
How Much Do Small Businesses Pay Their Employees?
Small firms employ 62,250,556 people — 45.9 percent of private employment — and pay $3.465 trillion in annual payroll, which is 38.7 percent of the private total. Those two shares do not match, and the gap between them is measurable.
The Axis Small Business Payroll Gap
Axis Intelligence Research derives average annual payroll per employee for small firms and for all firms, then expresses the first as a percentage of the second:
- Small-firm average = $3,465,049,519 thousand ÷ 62,250,556 employees = $55,663
- Implied all-firm total payroll = $3,465,049,519 thousand ÷ 0.387 = $8.954 trillion
- Implied all-firm total employment = 62,250,556 ÷ 0.459 = 135,622,126
- All-firm average = $8,953,616,328 thousand ÷ 135,622,126 = $66,019
- Axis Small Business Payroll Gap = $55,663 ÷ $66,019 = 84.3%
The shortcut check confirms it: 38.7 ÷ 45.9 = 84.3 percent. A small-firm job pays, on average, 84.3 cents for every dollar the same economy pays across all firm sizes — a difference of $10,356 a year.
Axis Small Business Payroll Gap by industry, 2022
| Industry | Small-firm avg. pay | All-firm avg. pay | Axis gap ratio | Source |
|---|---|---|---|---|
| Information | $97,032 | $142,101 | 68.3% | Census SUSB 2022 |
| Health care & social assistance | $49,499 | $60,422 | 81.9% | Census SUSB 2022 |
| Educational services | $40,888 | $48,109 | 85.0% | Census SUSB 2022 |
| Manufacturing | $59,457 | $69,879 | 85.1% | Census SUSB 2022 |
| Finance & insurance | $105,903 | $123,403 | 85.8% | Census SUSB 2022 |
| Professional, scientific & technical | $90,603 | $105,228 | 86.1% | Census SUSB 2022 |
| Administrative & support | $48,977 | $56,451 | 86.8% | Census SUSB 2022 |
| Wholesale trade | $75,939 | $87,097 | 87.2% | Census SUSB 2022 |
| Real estate & rental and leasing | $63,936 | $69,473 | 92.0% | Census SUSB 2022 |
| Transportation & warehousing | $52,665 | $56,585 | 93.1% | Census SUSB 2022 |
| Construction | $68,036 | $72,530 | 93.8% | Census SUSB 2022 |
| Other services | $39,430 | $41,738 | 94.5% | Census SUSB 2022 |
| Arts, entertainment & recreation | $45,560 | $47,498 | 95.9% | Census SUSB 2022 |
| Accommodation & food services | $25,286 | $25,612 | 98.7% | Census SUSB 2022 |
| Retail trade | $44,207 | $36,607 | 120.8% | Census SUSB 2022 |
Chart 4 — Axis Small Business Payroll Gap by industry. Axis Intelligence Research calculation from U.S. Census Bureau Statistics of U.S. Businesses 2022, published in the SBA Office of Advocacy 2025 Small Business Profile.
Two results deserve attention.
Information is the worst gap in the economy at 68.3 percent — a small software or media firm pays $97,032 where the sector average is $142,101. That is a $45,000 annual gap in a sector where talent is mobile and remote work removed the geographic excuse for paying less. It is the clearest quantitative statement of why small technology firms lose engineers to large ones.
Retail trade inverts. Small retailers pay $44,207 against a sector average of $36,607 — 120.8 percent. This is not a data error and it is not generosity. Small retail employs comparatively more full-time staff, while the sector average is pulled down by large-format retail’s heavy use of part-time hours. Payroll-per-employee is not an hourly wage, and retail is the industry where that distinction changes the sign of the result.
Mia Scarlett: The payroll gap is the number I’d put in front of anyone modelling a small business acquisition. A firm operating at 84 cents on the dollar for labor is not necessarily underpaying — it may simply be buying different hours, or carrying a compensation mix that shows up as owner draw rather than W-2 payroll, which SUSB won’t capture. But if you’re underwriting a services roll-up and you assume you can hold that 84 percent while you scale toward a large-firm cost structure, you’re modelling a margin that the census data says evaporates. Retail is the counterexample that proves the point: read the denominator before you read the ratio.
Do Small Businesses Actually Create Most New Jobs?
Between March 2023 and March 2024, U.S. establishments opened 1,281,290 units and closed 1,125,979, a net gain of 155,311. Small businesses accounted for roughly 1.1 million of those openings and 982,940 of the closings.
Opening and expanding establishments added 14.4 million jobs; closing and contracting establishments lost 13.0 million; net gain 1.4 million. Small businesses contributed a net increase of 1.2 million jobs — 88.9 percent of the national total.
That 88.9 percent figure is real and it is the SBA’s own. It is also a net figure, which means it is the difference between two enormous gross flows, and small differences in either flow swing the share dramatically. Axis Intelligence Research computes small firms’ share of gross establishment openings at 85.9 percent and of gross closings at 87.3 percent, producing a net establishment gain of roughly 117,000 — about 75 percent of the national net. The job-share and establishment-share tell the same story with different magnitudes, and the openings figure carries the SBA’s rounding to the nearest hundred thousand, so treat 85.9 percent as approximate.
Longer-run: between 1998 and 2022, small business employment grew 13.1 percent, reaching 62.3 million.
What Share of Small Businesses Use AI in 2026?
Two federal instruments measure this, and they disagree by more than a factor of two. Both are correct.
The Federal Reserve Banks’ 2026 Report on Employer Firms — drawn from the 2025 Small Business Credit Survey, fielded September 3 to November 14, 2025, with 6,525 responses — found that 46 percent of small employer firms said their business or its employees currently use AI, with a further 15 percent planning to start within twelve months and 33 percent having no plans at all.
The Census Bureau’s Business Trends and Outlook Survey, a nationally representative biweekly panel of roughly 1.2 million businesses, put national AI use at 19.8 percent as of May 3, 2026.
AI adoption among small businesses: two measures
| Measure | Rate | Population | Period | Source |
|---|---|---|---|---|
| Currently use AI | 46% | Small employer firms (1–499 emp.) | Sep–Nov 2025 | Federal Reserve Banks, SBCS |
| Fully integrated AI | 7% of users (≈3.2% of firms) | Small employer firms | Sep–Nov 2025 | Federal Reserve Banks, SBCS |
| Used AI in prior two weeks | 19.8% | All U.S. businesses | May 3, 2026 | Census Bureau, BTOS |
| Used AI, firms 250+ employees | 37% | All U.S. businesses | May 3, 2026 | Census Bureau, BTOS |
| Used AI, firms 100–249 employees | 32% | All U.S. businesses | May 3, 2026 | Census Bureau, BTOS |
| Used AI, firms with ≤4 employees | under 20% | All U.S. businesses | May 3, 2026 | Census Bureau, BTOS |
Chart 5 — AI adoption by firm size and measurement instrument. Sources: Federal Reserve Banks 2026 Report on Employer Firms; U.S. Census Bureau Business Trends and Outlook Survey.
The reconciliation is definitional and populational. The Fed surveys employer firms only, through a convenience sample the Federal Reserve itself flags as non-random and subject to selection bias; the Census question asks whether a business used AI in any business function during the prior two weeks, across a nationally representative frame that includes the millions of micro-firms that dominate the count. Axis Intelligence Research treats these as two different questions rather than a contradiction, and declines to average them — a survey-based self-report of “currently uses” and a two-week recall measure across a different population do not combine into a meaningful figure. Our AI in Business Statistics index works through that reconciliation in detail.
Depth is where both instruments agree. Among small employer firms using AI, roughly half describe themselves as experimenting, 44 percent as partially integrated, and just 7 percent as fully integrated — putting full integration at about 3.2 percent of small employer firms. The tasks are unglamorous: writing or marketing (83 percent), individual productivity (61 percent), planning or analysis (51 percent). Reported effects: 71 percent said productivity rose, 39 percent cited better quality, 31 percent higher sales, and the majority saw no change in labor costs.
Sector spread in the Census data is close to threefold: information at 39.7 percent, finance and insurance at 33.9 percent, retail trade at roughly 14 percent. Retail — the sector generating the most new business applications in June 2026 — is the least likely to be using AI.
Mia Scarlett: Seven percent fully integrated is the number that should end the “AI is transforming small business” sentence, at least for 2026. The Fed’s own respondents describe a tool sitting in the marketing function, which is where cheap experiments live. Nothing in either dataset shows AI touching the parts of a small business that determine survival — pricing, receivables, inventory, staffing. When the “planning or analysis” line moves past 51 percent and full integration clears the single digits, the productivity story becomes a filing-level story. It isn’t one yet.
Can Small Businesses Get Credit in 2026?
Sixty percent of small employer firms applied for financing in the twelve months preceding the 2025 Small Business Credit Survey. Of those applicants, 42 percent received the full amount sought, 36 percent received some or most, and 22 percent received nothing.
Small business financing outcomes, 2025 SBCS
| Metric | Value | Source |
|---|---|---|
| Applied for financing | 60% | Federal Reserve Banks, SBCS |
| Applied for loan, line of credit or merchant cash advance | 38% | Federal Reserve Banks, SBCS |
| Received full amount sought | 42% | Federal Reserve Banks, SBCS |
| Received some or most | 36% | Federal Reserve Banks, SBCS |
| Received none | 22% | Federal Reserve Banks, SBCS |
| Fully approved at small banks | 57% | Federal Reserve Banks, SBCS |
| Applicants seeking online fintech lenders, 2025 | 29% | Federal Reserve Banks, SBCS |
| Applicants seeking online fintech lenders, 2020 | 17% | Federal Reserve Banks, SBCS |
| Firms with no outstanding debt | 31% | Federal Reserve Banks, SBCS |
| Firms using a personal guarantee (of those with debt) | 59% | Federal Reserve Banks, SBCS |
Chart 6 — Financing application outcomes and lender channel shift. Source: Federal Reserve Banks, 2026 Report on Employer Firms.
The channel shift is the story. Applicants seeking financing at online fintech lenders rose from 17 percent in the 2020 survey to 29 percent in 2025. Cost transparency moved the other way: 60 percent of borrowers from online lenders reported that actual borrowing costs came in higher than expected, against 37 percent at small banks and 32 percent at large banks. Small-bank applicants were also the most likely to be fully approved, at 57 percent.
On the supply side, Community Reinvestment Act reporting shows large banks issued $84.2 billion in 2023 to businesses with revenues of $1 million or less. Total reported new lending through loans of $1 million or less came to $242.9 billion, and through loans of $100,000 or less, $104.4 billion.
Balance sheets are more conservative than they were: 31 percent of firms carry no outstanding debt, up from 21 percent in the 2020 survey and back to pre-pandemic levels. Among those that do carry debt, 59 percent secured it with a personal guarantee and 51 percent with business assets — a reminder that for most small employers, business credit is still personal credit wearing a different jacket.
What Are Small Businesses’ Biggest Challenges in 2026?
Rising costs of goods, services and wages was the most common financial challenge in the 2025 SBCS. More than four in ten firms reported that tariff-related cost increases were a financial challenge, and 77 percent reported one or both. Tariff pressure concentrated in retail (69 percent) and manufacturing (62 percent).
Forty-eight percent of firms sourced at least some inputs from outside the United States, and 14 percent sourced more than half. Among firms with foreign inputs, a large majority reported year-over-year price increases. Their responses:
| Response to higher input costs | Share of affected firms | Source |
|---|---|---|
| Passed at least some cost to customers | 76% | Federal Reserve Banks, SBCS |
| Absorbed at least some of the increase | 60% | Federal Reserve Banks, SBCS |
| Switched to domestic suppliers | 13% | Federal Reserve Banks, SBCS |
| Switched to different foreign suppliers | 8% | Federal Reserve Banks, SBCS |
| Relocated production to the United States | 3% | Federal Reserve Banks, SBCS |
Three percent reshored. Whatever the policy intent, small employer firms overwhelmingly answered cost pressure with price increases and margin absorption, not supply chain relocation.
Expectations deteriorated even as performance held. The revenue expectations index fell six points year over year, from 39 to 33; the employment expectations index fell three points, from 26 to 23. Both are the lowest readings since the 2020 survey. Reaching customers and growing sales was the top operational challenge, followed by hiring or retaining qualified staff.
Small Business Ownership Demographics
| Group | Businesses without employees | With employees | Total businesses | Source |
|---|---|---|---|---|
| Female-owned | 12,720,000 | 1,309,282 | 14,029,282 | Census ABS 2022 / Nonemployer Statistics 2022 |
| Male-owned | 15,590,000 | 3,633,787 | 19,223,787 | Census ABS 2022 / Nonemployer Statistics 2022 |
| Veteran-owned | 1,378,000 | 273,542 | 1,651,542 | Census ABS 2022 / Nonemployer Statistics 2022 |
| Hispanic-owned | 5,138,000 | 465,202 | 5,603,202 | Census ABS 2022 / Nonemployer Statistics 2022 |
| Black or African American-owned | 4,436,000 | 194,585 | 4,630,585 | Census ABS 2022 / Nonemployer Statistics 2022 |
| Asian-owned | 2,787,000 | 650,680 | 3,437,680 | Census ABS 2022 / Nonemployer Statistics 2022 |
| American Indian and Alaska Native-owned | 361,000 | 47,519 | 408,519 | Census ABS 2022 / Nonemployer Statistics 2022 |
| Native Hawaiian and Other Pacific Islander-owned | 101,000 | 9,552 | 110,552 | Census ABS 2022 / Nonemployer Statistics 2022 |
| White-owned | 21,860,000 | 4,766,289 | 26,626,289 | Census ABS 2022 / Nonemployer Statistics 2022 |
| Rural | 4,614,000 | 820,280 | 5,434,280 | Census ABS 2022 / Nonemployer Statistics 2022 |
| Urban | 22,500,000 | 4,724,916 | 27,224,916 | Census ABS 2022 / Nonemployer Statistics 2022 |
Counts include only businesses classifiable by owner demographic group, and ownership shares include equal as well as majority ownership, so categories overlap and do not sum to the national total.
Against workforce shares: women made up 46.9 percent of workers and owned 44.6 percent of businesses. Veterans were 4.3 percent of workers and owned 5.3 percent of businesses — the only group in the profile that owns businesses at a higher rate than it works. Hispanics were 18.1 percent of workers and owned 16.5 percent of businesses.
The employer gap is sharper than the ownership gap. Only 4.2 percent of Black-owned businesses have employees, against 18.9 percent of Asian-owned and 17.9 percent of White-owned firms. Ownership parity and payroll parity are different problems.
Small Business Exports
In 2023, 277,799 identified firms exported $1.8 trillion in goods from the United States. Of those exporters, 270,014 — 97.2 percent — were small. Their $588.4 billion made up 33.0 percent of exports by identified firms.
Axis Intelligence Research calculates average export value per small exporting firm at approximately $2.18 million ($588.4 billion ÷ 270,014), against roughly $155 million for the 7,785 large exporters. Small firms are 97 percent of exporters and one-third of export value.
Methodology
Collection. Every figure in this report was retrieved from a primary source document during production on August 2, 2026. Five federal sources were used: the SBA Office of Advocacy 2025 Small Business Profile (United States), which republishes Census Statistics of U.S. Businesses 2022, Census Nonemployer Statistics 2022, Census Annual Business Survey 2022, BLS Business Employment Dynamics, FFIEC Community Reinvestment Act aggregate data, and Census trade profiles; the Census Bureau’s Business Formation Statistics release for June 2026 (published July 9, 2026); the BLS Business Employment Dynamics Table 7 survival series for total private establishments (data through March 2025); the Federal Reserve Banks’ 2026 Report on Employer Firms; and the Census Bureau’s Business Trends and Outlook Survey summary of AI use published May 26, 2026.
Formulas for Axis-calculated figures.
Axis Employer Conversion Rate (AECR), v1.0. AECR = projected business formations within four quarters ÷ total business applications, same month, both seasonally adjusted. June 2026: 29,741 ÷ 531,423 = 5.60%. Eight-quarter variant: 41,042 ÷ 531,423 = 7.72%. High-propensity variant: 29,741 ÷ 149,714 = 19.87%. Snapshot date: June 2026 reference month, released July 9, 2026.
Axis Five-Year Survival Band, v1.0. For each opening cohort with a complete five-year window in BLS BED Table 7 (total private), we read the “survival rate since birth” at year five. Eleven consecutive cohorts qualify (years ended March 2010 through March 2020). Band = minimum to maximum; mean = arithmetic mean of the eleven readings = 50.98%, published as 51.0%. This is a baseline reading; it is not described relative to any history Axis has not computed.
Axis Small Business Payroll Gap, v1.0. Small-firm average annual payroll per employee = small payroll ÷ small employees. All-firm average = (small payroll ÷ small payroll share) ÷ (small employees ÷ small employment share). Gap ratio = small average ÷ all-firm average. National: $55,663 ÷ $66,019 = 84.3%. The same formula is applied per industry using the industry rows of the SUSB table. Snapshot: 2022 data vintage.
All arithmetic was independently recomputed before publication. The firm-count composition table was validated against the source total: 29,811,495 + 5,720,093 + 654,501 = 36,186,089, matching the SBA’s published figure exactly.
Limitations.
- Data vintage. The 36.2 million count, the 62.3 million employment figure, all payroll figures, and all ownership demographics reflect 2022 data — the most recent vintage published in the SBA’s 2025 profile. They are flagged as older data throughout the accompanying CSV. No 2026 Small Business Profile had been released as of August 2, 2026.
- Projections, not counts. Business formation figures for June 2026 are Census Bureau econometric projections. Actual administrative confirmation of employer formations currently extends only through the fourth quarter of 2023. The AECR is an estimate.
- Establishments are not firms. BLS survival data tracks establishments (physical locations), not firms. A multi-location firm appears multiple times; a closing establishment does not always mean a failed business.
- Convenience sampling. The Small Business Credit Survey is explicitly not a random sample. The Federal Reserve advises interpreting results with awareness of selection bias. Its 46 percent AI figure should not be read as a nationally representative rate.
- Payroll is not wages. SUSB payroll excludes owner draws and non-W-2 compensation, and payroll-per-employee does not adjust for hours. Retail trade’s 120.8 percent ratio is a direct consequence of this and is presented with that caveat.
- Figures not merged. We do not average the Federal Reserve’s 46 percent AI figure with the Census Bureau’s 19.8 percent. The methodologies and populations are incompatible; both are published side by side.
- Source rounding. The SBA publishes small business establishment openings as “1.1 million.” Derived shares using that figure are approximate and labelled as such.
About This Dataset
Title: Small Business Statistics 2026 — Formation, Survival, Payroll and AI Adoption
Creator and publisher: Axis Intelligence Research
Temporal coverage: 1994–2026 (survival cohorts 1994–2025; formation data through June 2026; stock data 2022)
Spatial coverage: United States, including four Census regions
Format: CSV, UTF-8, one observation per row, ISO 8601 dates
Rows: 280 observations across 5 primary source documents, each with full provenance columns
License: Creative Commons Attribution 4.0 International (CC BY 4.0) — free to reuse, redistribute and adapt, including commercially, with attribution
Download: small-business-statistics.csv Mirrors: Hugging Face Datasets, Kaggle, GitHub
Cite this dataset: Axis Intelligence Research, Small Business Statistics 2026, 2026.
Cite This Research
APA Axis Intelligence Research, & Scarlett, M. (2026, August 2). Small business statistics 2026: Formation, survival, payroll and AI adoption. Axis Intelligence. https://axis-intelligence.com/small-business-statistics/
MLA Axis Intelligence Research, and Mia Scarlett. “Small Business Statistics 2026: Formation, Survival, Payroll and AI Adoption.” Axis Intelligence, 2 Aug. 2026, axis-intelligence.com/small-business-statistics/.
Chicago Axis Intelligence Research and Mia Scarlett. “Small Business Statistics 2026: Formation, Survival, Payroll and AI Adoption.” Axis Intelligence, August 2, 2026. https://axis-intelligence.com/small-business-statistics/.
Frequently Asked Questions
How many small businesses are there in the United States?
There are 36,186,089 small businesses in the United States, representing 99.9 percent of all U.S. businesses, according to the SBA Office of Advocacy’s 2025 Small Business Profile. Of those, 29,811,495 have no employees and 6,374,594 have a payroll.
What percentage of small businesses fail?
About 22 percent of new establishments close within their first year, and roughly half close within five years. Axis Intelligence Research finds five-year survival held between 50.1 percent and 51.9 percent across the eleven cohorts opening in the years ended March 2010 through March 2020, averaging 51.0 percent, per BLS Business Employment Dynamics data through March 2025.
Has the small business failure rate gotten worse since the pandemic?
No. The cohort opening in the year ended March 2020 reached 51.4 percent five-year survival in March 2025, statistically indistinguishable from the 50.2 percent recorded by the 2015 cohort and inside a 1.8-point band that has held since 2010.
How many new businesses are started each month?
Americans filed 531,423 seasonally adjusted business applications in June 2026, of which 149,714 were classified as high-propensity, per the Census Bureau’s Business Formation Statistics released July 9, 2026. The Census Bureau projects 29,741 will become employer businesses within four quarters.
What share of new business applications actually become real businesses with employees?
According to Axis Intelligence Research, 5.6 percent — the Axis Employer Conversion Rate for June 2026, calculated as 29,741 projected four-quarter employer formations divided by 531,423 total applications. Among high-propensity applications only, the rate is 19.9 percent.
How much do small businesses pay their employees on average?
Average annual payroll per employee at U.S. small firms was $55,663 in 2022, against $66,019 across all firm sizes — an Axis Small Business Payroll Gap of 84.3 percent, calculated by Axis Intelligence Research from Census Statistics of U.S. Businesses data.
What percentage of small businesses use AI?
Forty-six percent of small employer firms reported using AI in the Federal Reserve’s 2025 Small Business Credit Survey, but only 7 percent of those users had fully integrated it. The Census Bureau’s nationally representative Business Trends and Outlook Survey put AI use across all U.S. businesses at 19.8 percent as of May 3, 2026, with firms of four or fewer employees under 20 percent.
How many small businesses get approved for loans?
Sixty percent of small employer firms applied for financing in the year before the 2025 Small Business Credit Survey. Forty-two percent of applicants received the full amount sought, 36 percent received some or most, and 22 percent received none. Applicants at small banks were the most likely to be fully approved, at 57 percent.
Do small businesses create most new jobs?
Small businesses contributed a net increase of 1.2 million jobs between March 2023 and March 2024 — 88.9 percent of the national net gain of 1.4 million, per the SBA Office of Advocacy. Axis Intelligence Research computes their share of gross establishment openings at approximately 85.9 percent over the same period.
How many small businesses are owned by women?
Women owned 44.6 percent of U.S. businesses in 2022 while making up 46.9 percent of workers. Female-owned businesses numbered 14,029,282, of which 1,309,282 had employees.
Last updated: August 2, 2026
Corrections: [email protected]
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