Impact of the Pandemic on Small Business Development
U.S. Small Business Activity and New Business Applications During COVID-19
Two contrasting small-business patterns were observed during the COVID-19 pandemic. U.S. Census Bureau research documented sharp declines in activity, sentiment and expectations among many existing small businesses, while Business Formation Statistics recorded a strong rebound in new Business Applications after the initial pandemic shock.
Direct answer: the pandemic period was highly disruptive for many existing small firms, but it also coincided with a surge in entrepreneurial initiation. U.S. Business Applications rose from 763,406 in Q4 2019 to 962,176 in Q4 2020, a calculated increase of about 26.0%. The ranking below measures where application growth was strongest within 20 directly verified U.S. jurisdictions. It does not measure business survival or establish that COVID-19 caused the increase.
Business Applications are based on applications for Employer Identification Numbers used predominantly for business purposes. They indicate business initiation activity, but they are not the same as actual business births, surviving firms, employment growth or small-business revenue.
The ranking uses one underlying official numeric source: U.S. Census Bureau Business Formation Statistics. Historical jurisdiction series are accessed through FRED, while a separate Census Bureau research paper is used only for pandemic-period context.
Metric: Q4 2019 to Q4 2020 percentage change in Business Applications. Unit: percent. Direction: larger increase ranks higher. Coverage: 19 states plus the District of Columbia. Status counts: 20 calculated_value, 0 official_value, 0 official_forecast, 0 modeled_projection.
Business Applications increased from 8,469 in Q4 2019 to 13,755 in Q4 2020.
Alaska is the only jurisdiction in this confirmed sample with a Q4 year-over-year decline.
19 states plus the District of Columbia. Jurisdictions without directly verified inputs are not ranked.
National Business Applications increased from 763,406 in Q4 2019 to 962,176 in Q4 2020.
Every percentage is calculated from official observed Census BFS counts. No forecast or projection is used.
What Census Data Show About Small Businesses During COVID-19
The pandemic did not affect every part of the small-business economy in the same way. Census research found sharp deterioration in activity and expectations among many existing small firms during the early pandemic period. Accommodation and Food Services was among the sectors especially affected.
Business Formation Statistics captured a different development. After an initial decline, new Business Applications increased substantially. Census researchers found particularly strong application growth in Retail Trade and among Non-store Retailers. Applications associated with businesses likely to become employers also increased, although many applications were associated with businesses likely to operate without employees.
The ranking on this page isolates that second phenomenon. It compares Business Applications in the same calendar quarter before and during the pandemic and does not rank overall state economic performance.
Top 10 Pandemic-Period Increases in Business Applications
Alabama, Georgia and Mississippi recorded the three largest Q4 year-over-year increases in the verified sample. Six of the first eight positions are jurisdictions in the Census South region.
Q4 2020 versus Q4 2019 Business Application growth
| Rank | Jurisdiction | Change | Region / Note |
|---|---|---|---|
| 1 | Alabama | +62.4% | South; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 8,469 and 13,755; formula: ((13,755−8,469)/8,469)×100. |
| 2 | Georgia | +56.0% | South; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 37,758 and 58,899; formula: ((58,899−37,758)/37,758)×100. |
| 3 | Mississippi | +51.4% | South; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 6,356 and 9,620; formula: ((9,620−6,356)/6,356)×100. |
| 4 | Michigan | +39.2% | Midwest; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 20,304 and 28,263; formula: ((28,263−20,304)/20,304)×100. |
| 5 | Illinois | +35.7% | Midwest; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 25,981 and 35,266; formula: ((35,266−25,981)/25,981)×100. |
| 6 | Delaware | +29.9% | South; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 5,848 and 7,599; formula: ((7,599−5,848)/5,848)×100. |
| 7 | Florida | +29.0% | South; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 84,782 and 109,364; formula: ((109,364−84,782)/84,782)×100. |
| 8 | Texas | +28.9% | South; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 66,913 and 86,245; formula: ((86,245−66,913)/66,913)×100. |
| 9 | New Jersey | +26.1% | Northeast; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 24,909 and 31,409; formula: ((31,409−24,909)/24,909)×100. |
| 10 | Missouri | +25.5% | Midwest; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 12,116 and 15,207; formula: ((15,207−12,116)/12,116)×100. |
Values are rounded to one decimal place for display. Rank is calculated from the unrounded percentage. The Top 10 refers only to the 20 confirmed jurisdictions in this research sample.
Chart: Q4 2020 Business Application Growth Versus Q4 2019
The chart uses the same raw calculated percentages as the ranking table. The zero line separates growth from decline.
Methodology
The ranking measures the percentage change in U.S. Census Bureau Business Applications between Q4 2019 and Q4 2020. Both inputs come from the same historical quarterly, not-seasonally-adjusted Business Formation Statistics series distributed through FRED.
Metric and unit
Metric: Business Applications. Ranking unit: percentage change from Q4 2019 to Q4 2020.
Direction
Descending. A larger increase receives a higher rank. Negative change ranks below positive change.
Calculation formula
((Q4 2020 applications − Q4 2019 applications) ÷ Q4 2019 applications) × 100.
Value status
All 20 ranking results are calculated_value. The final percentages are not directly published values; they are calculated from official observed Census BFS inputs.
Source hierarchy
U.S. Census Bureau BFS is the single underlying numeric source. FRED distributes the historical series. Census pandemic research is used as contextual evidence, not as a ranking-data source.
Coverage and missing values
Coverage is limited to 20 jurisdictions with both historical quarterly observations directly verified. Missing jurisdictions are excluded rather than estimated or assigned a rank.
Q4 2020 is compared with Q4 2019 using the same not-seasonally-adjusted quarterly series. Rank is calculated from unrounded results; displayed percentages are rounded to one decimal place.
The historical quarterly series used here were updated on January 14, 2021 and were later discontinued as BFS moved to a monthly release structure. This analysis keeps all ranking inputs within that quarterly data vintage rather than combining them with later monthly revisions.
Conflicting vintages are not averaged. The method assumes the historical Q4 observations within the selected quarterly vintage are comparable for the year-over-year calculation.
Business Applications do not measure business survival, closures, revenue, profitability, payroll, employment, productivity or the causal effect of COVID-19. They also differ from Business Formations, which identify new wage-paying employer businesses arising from applications.
Main Ranking: Business Application Growth in 20 Verified U.S. Jurisdictions
Search the confirmed sample, filter by Census region or status, sort the rows or switch between Top 10, Top 20 and all confirmed entries.
Q4 2020 versus Q4 2019 Business Application growth
| Rank | Jurisdiction | Change | Region / Note |
|---|---|---|---|
| 1 | Alabama | +62.4% | South; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 8,469 and 13,755; formula basis disclosed in methodology. |
| 2 | Georgia | +56.0% | South; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 37,758 and 58,899; formula basis disclosed in methodology. |
| 3 | Mississippi | +51.4% | South; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 6,356 and 9,620; formula basis disclosed in methodology. |
| 4 | Michigan | +39.2% | Midwest; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 20,304 and 28,263; formula basis disclosed in methodology. |
| 5 | Illinois | +35.7% | Midwest; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 25,981 and 35,266; formula basis disclosed in methodology. |
| 6 | Delaware | +29.9% | South; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 5,848 and 7,599; formula basis disclosed in methodology. |
| 7 | Florida | +29.0% | South; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 84,782 and 109,364; formula basis disclosed in methodology. |
| 8 | Texas | +28.9% | South; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 66,913 and 86,245; formula basis disclosed in methodology. |
| 9 | New Jersey | +26.1% | Northeast; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 24,909 and 31,409; formula basis disclosed in methodology. |
| 10 | Missouri | +25.5% | Midwest; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 12,116 and 15,207; formula basis disclosed in methodology. |
| 11 | Indiana | +23.5% | Midwest; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 11,774 and 14,540; formula basis disclosed in methodology. |
| 12 | Connecticut | +21.4% | Northeast; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 7,268 and 8,826; formula basis disclosed in methodology. |
| 13 | Arizona | +19.7% | West; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 16,976 and 20,313; formula basis disclosed in methodology. |
| 14 | Massachusetts | +18.8% | Northeast; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 12,364 and 14,684; formula basis disclosed in methodology. |
| 15 | New York | +16.7% | Northeast; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 51,555 and 60,166; formula basis disclosed in methodology. |
| 16 | District of Columbia | +15.4% | South; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 2,820 and 3,255; formula basis disclosed in methodology. |
| 17 | California | +13.4% | West; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 81,172 and 92,022; formula basis disclosed in methodology. |
| 18 | Colorado | +12.4% | West; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 18,582 and 20,885; formula basis disclosed in methodology. |
| 19 | Utah | +6.0% | West; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 11,213 and 11,886; formula basis disclosed in methodology. |
| 20 | Alaska | -21.3% | West; calculated_value; U.S. Census Bureau BFS via FRED; source years Q4 2019 and Q4 2020; target Q4 2020; inputs 1,972 and 1,552; formula basis disclosed in methodology. |
Single underlying ranking source: U.S. Census Bureau Business Formation Statistics. Historical jurisdiction observations are distributed through FRED. No omitted jurisdiction is estimated or assigned a rank.
Insights From the Verified Sample
Key Insight
Nineteen of the 20 verified jurisdictions recorded more Business Applications in Q4 2020 than in Q4 2019.
Notable Pattern
The three largest increases all exceeded 50%: Alabama at +62.4%, Georgia at +56.0% and Mississippi at +51.4%.
Regional/Source Concentration
Six of the first eight positions are in the Census South region: Alabama, Georgia, Mississippi, Delaware, Florida and Texas. All ranking rows use the same Census BFS source framework.
Outlier
Alaska is the only jurisdiction in the verified sample with a decline, falling from 1,972 applications to 1,552, or -21.3%.
What These Pandemic-Era Business Application Numbers Mean
The Census evidence shows why small-business conditions during COVID-19 should not be summarized with a single positive or negative label. Many operating small firms experienced severe disruption, while new business initiation accelerated later in 2020.
A high position in this ranking means that EIN-based Business Applications grew quickly. It does not establish stronger business survival, higher profitability or a more favorable overall pandemic outcome.
Related StatRanker research covers government support, entrepreneur challenges, startup survival and SBA lending.
FAQ
What exactly does this ranking measure?
It ranks the percentage change in U.S. Census Bureau Business Applications from Q4 2019 to Q4 2020 for 20 directly verified jurisdictions.
Are Business Applications the same as new businesses?
No. Business Applications are qualifying EIN applications. Business Formations are new wage-paying employer businesses that emerge from applications. Not every application becomes an operating employer business.
Are the percentages official published Census values?
No. The Q4 2019 and Q4 2020 counts are official observed Census BFS values. The percentages are calculated_value results produced from those inputs using the formula disclosed in the methodology.
Why compare Q4 2020 with Q4 2019?
The comparison uses the same calendar quarter in consecutive years and keeps both observations within the same historical quarterly, not-seasonally-adjusted BFS series.
Does a high rank mean a state benefited from COVID-19?
No. The table measures application growth during the pandemic period. It does not estimate the causal effect of COVID-19 or measure the overall economic outcome for existing small businesses.
How did the United States overall compare?
National Business Applications increased from 763,406 in Q4 2019 to 962,176 in Q4 2020, which equals a calculated increase of approximately 26.0%.
Why are only 20 jurisdictions ranked?
Only jurisdictions with both historical quarterly observations directly verified for this dataset are included. Other jurisdictions are excluded rather than estimated.
Sources
U.S. Census Bureau — Business Formation Statistics: About the Data
Primary methodology and definition source for Business Applications, Employer Identification Number coverage and Business Formations.
U.S. Census Bureau — Business Formation Statistics FAQ
Used to verify coverage limits and the distinction between applications and realized employer business formations.
U.S. Census Bureau — High Frequency Business Dynamics During COVID-19
Context source for conditions among existing small businesses and the pandemic-period increase in new Business Applications. It is not used to generate ranking values.
https://www.census.gov/library/working-papers/2021/adrm/CES-WP-21-06.html
FRED — Business Formation Statistics Release
Federal Reserve Bank of St. Louis distribution environment for the historical U.S. Census Bureau BFS series used in the ranking.
United States Historical Quarterly Series
National Q4 2019 and Q4 2020 observations used for the +26.0% U.S. reference benchmark.
Row-Level Series — South
Historical Census BFS observations for South-region jurisdictions included in the ranking.
- https://fred.stlouisfed.org/series/BUSAPPNSAAL
- https://fred.stlouisfed.org/series/BUSAPPNSAGA
- https://fred.stlouisfed.org/series/BUSAPPNSAMS
- https://fred.stlouisfed.org/series/BUSAPPNSADE
- https://fred.stlouisfed.org/series/BUSAPPNSAFL
- https://fred.stlouisfed.org/series/BUSAPPNSATX
- https://fred.stlouisfed.org/series/BUSAPPNSADC
Row-Level Series — Midwest
Historical Census BFS observations for Midwest jurisdictions included in the ranking.
Row-Level Series — Northeast
Historical Census BFS observations for Northeast jurisdictions included in the ranking.
Row-Level Series — West
Historical Census BFS observations for West-region jurisdictions included in the ranking.
