More Business Closures, Fewer Openings in 2009
According to new data from the SBA, an estimated 552,600 new employer firms opened for business and 660,900 firms closed shop in 2009.
The agency's Office of Advocacy provided an update of small businesses statistics. Among them, seven out of 10 new employer firms survive at least two years, half at least five years, a third at least 10 years, and a quarter stay in business 15 years or more. In 2009, there were 27.5 million businesses in the United States.
Small businesses rely heavily on owner investment and bank credit, averaging about $80,000 a year for young firms, the SBA said. Startups rely about equally on owners' cash injections into the business and bank credit while young firms receive about three-quarters of their funds from banks via loans, credit cards, and lines of credit. One-tenth of startups and about a third of young firms do not use capital injections.
Small firms, usually defined as those with fewer than 500 employees, accounted for 65% or 9.8 million of the 15 million net new jobs created between 1993 and 2009. Much of the job growth is from fast-growing, high-impact firms, which represent about 5% to 6% of all firms and are on average, 25 years old.
Citing Federal Reserve Board data, the SBA said by mid-2010, commercial banks began to ease tight lending conditions on small businesses that had begun in early 2007. Credit has continued to flow as loans under $1 million totaled $695 billion in fiscal year 2009. After declining over the past few years, venture capital investment dollars increased in mid-2010.