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Analysis Examined Markets with the Highest Annual Revenue, Credit Scores and Other Factors
Biz2Credit has identified San Jose as the Best Small Business City in America, based on a weighted average that includes annual revenue, credit score, age of business (in months), cash flow, debt-to-income ratio, incorporation (C-Corp or LLC vs. sole proprietorship), and business owners' personal credit scores.
"San Jose remains the center of innovation and new business job creation in the U.S.," said Biz2Credit CEO Rohit Arora, one of the nation's leading experts in small business finance, who oversaw the research. "Surprisingly, Detroit-Dearborn scored very well in large part because of the auto industry's rebound and the growing technology sector in the area."
Meanwhile, despite being the nation's financial hub and a city with a thriving economy, the New York City metro area ranked only seventh in the Biz2Credit's Best Small Business Cities ranking because of the high cost of doing business.
"While revenue figures are usually higher for New York-based companies, so are the costs of operation. The minimum wage is higher, and now Mayor DeBlasio has expanded paid sick leave. This hinders small business owners," Arora explained. "When fixed and marginal costs are high, it impacts cash flow significantly. There is also some fallout still from Hurricane Sandy and its impact on small businesses. This, too, hurt New York's ranking."
Houston dropped from the top spot last year. The oil boom in Texas has slowed a little, and business growth is not at the pace that we saw last year.
For this analysis, Biz2Credit defined "small businesses" as companies having fewer than 250 employees or less than $10 million in annual revenues. The Top 25 Cities for Small Business in 2014 are:
- San Jose-Sunnyvale-Santa Clara, CA
- Detroit-Dearborn, MI
- Denver, CO
- Los Angeles-Long Beach-Anaheim, CA
- San Francisco-Oakland, CA
- Las Vegas, NV
- New York metro area
- Atlanta, GA
- Washington, DC metro area
- Miami-Fort Lauderdale-West Palm Beach, FL
- Riverside-San Bernardino, CA
- Tampa-St. Petersburg, FL
- Sacramento, CA
- Indianapolis, IN
- Houston, TX
- Chicago, IL
- Portland, OR
- Dallas-Fort Worth, TX
- Phoenix-Scottsdale, AZ
- Charlotte, NC
- San Antonio, TX
- Seattle-Tacoma, WA
- Jacksonville, FL
- Philadelphia, PA
- Orlando-Kissimmee, FL
The Top 25 metro areas by Annual Revenue were: Riverside-San Bernardino, CA; Portland, OR; Jacksonville, FL; Los Angeles-Long Beach-Anaheim, CA; and Detroit-Dearborn, MI.
Top 25 Metro areas with the highest applications in 2013
| Top 25 Metro areas with the highest applications in 2013 | Average Annual Revenue | Average Credit Score | Average of Age in Months | Average BizAnalyzer Score |
|---|---|---|---|---|
| Riverside-San Bernardino-Ontario, CA | $1,215,845 | 602 | 45.5 | 52.1 |
| Portland-Vancouver-Hillsboro, OR-WA | $1,007,506 | 634 | 37.0 | 50.1 |
| Jacksonville, FL | $800,638 | 612 | 36.7 | 48.2 |
| Los Angeles-Long Beach-Anaheim, CA | $752,154 | 641 | 58.6 | 53.9 |
| Detroit-Warren-Dearborn, MI | $730,013 | 637 | 39.4 | 55.5 |
| New York-Newark-Jersey City, NY-NJ-PA | $574,801 | 637 | 47.3 | 52.6 |
| Chicago-Naperville-Elgin, IL-IN-WI | $541,797 | 632 | 42.4 | 50.5 |
| San Jose-Sunnyvale-Santa Clara, CA | $499,811 | 685 | 67.4 | 57.7 |
| Las Vegas-Henderson-Paradise, NV | $497,677 | 649 | 39.4 | 53.6 |
| Denver-Aurora-Lakewood, CO | $482,434 | 649 | 46.0 | 55.1 |
| Sacramento--Roseville--Arden-Arcade, CA | $419,636 | 635 | 32.1 | 51.7 |
| Atlanta-Sandy Springs-Roswell, GA | $384,282 | 623 | 45.4 | 52.5 |
| Miami-Fort Lauderdale-West Palm Beach, FL | $375,856 | 625 | 46.9 | 52.2 |
| Dallas-Fort Worth-Arlington, TX | $374,996 | 622 | 35.2 | 49.9 |
| Seattle-Tacoma-Bellevue, WA | $341,051 | 603 | 36.6 | 49.0 |
| Charlotte-Concord-Gastonia, NC-SC | $305,051 | 601 | 46.6 | 49.4 |
| San Francisco-Oakland-Hayward, CA | $274,164 | 637 | 51.9 | 53.7 |
| Indianapolis-Carmel-Anderson, IN | $245,311 | 607 | 47.1 | 51.5 |
| Houston-The Woodlands-Sugar Land, TX | $240,033 | 631 | 37.8 | 50.7 |
| Phoenix-Mesa-Scottsdale, AZ | $230,795 | 624 | 53.2 | 49.8 |
| Washington-Arlington-Alexandria, DC-VA-MD-WV | $224,982 | 629 | 34.9 | 52.5 |
| Philadelphia-Camden-Wilmington, PA-NJ-DE-MD | $216,435 | 621 | 25.7 | 47.7 |
| Tampa-St. Petersburg-Clearwater, FL | $210,676 | 635 | 40.4 | 51.9 |
| San Antonio-New Braunfels, TX | $197,535 | 617 | 29.3 | 49.4 |
| Orlando-Kissimmee-Sanford, FL | $195,413 | 616 | 33.6 | 47.6 |
| National Average | $372,202 | 623 | 59.7 | 46.5 |
"Centers of technological innovation are booming. Cities like Portland and Jacksonville are taking advantage of their slower pace, lower costs and good standard of living offered to residents," Arora says.
When sorted by Age of Business (in months), Philadelphia was the leader.
Top 25 Metro areas with the highest applications in 2013
| Top 25 Metro areas with the highest applications in 2013 | Average Annual Revenue | Average Credit Score | Average of Age in Months | Average BizAnalyzer Score |
|---|---|---|---|---|
| Philadelphia-Camden-Wilmington, PA-NJ-DE-MD | $216,435 | 621 | 25.7 | 47.7 |
| San Antonio-New Braunfels, TX | $197,535 | 617 | 29.3 | 49.4 |
| Sacramento--Roseville--Arden-Arcade, CA | $419,636 | 635 | 32.1 | 51.7 |
| Orlando-Kissimmee-Sanford, FL | $195,413 | 616 | 33.6 | 47.6 |
| Washington-Arlington-Alexandria, DC-VA-MD-WV | $224,982 | 629 | 34.9 | 52.5 |
| Dallas-Fort Worth-Arlington, TX | $374,996 | 622 | 35.2 | 49.9 |
| Seattle-Tacoma-Bellevue, WA | $341,051 | 603 | 36.6 | 49.0 |
| Jacksonville, FL | $800,638 | 612 | 36.7 | 48.2 |
| Portland-Vancouver-Hillsboro, OR-WA | $1,007,506 | 634 | 37.0 | 50.1 |
| Houston-The Woodlands-Sugar Land, TX | $240,033 | 631 | 37.8 | 50.7 |
| Detroit-Warren-Dearborn, MI | $730,013 | 637 | 39.4 | 55.5 |
| Las Vegas-Henderson-Paradise, NV | $497,677 | 649 | 39.4 | 53.6 |
| Tampa-St. Petersburg-Clearwater, FL | $210,676 | 635 | 40.4 | 51.9 |
| Chicago-Naperville-Elgin, IL-IN-WI | $541,797 | 632 | 42.4 | 50.5 |
| Atlanta-Sandy Springs-Roswell, GA | $384,282 | 623 | 45.4 | 52.5 |
| Riverside-San Bernardino-Ontario, CA | $1,215,845 | 602 | 45.5 | 52.1 |
| Denver-Aurora-Lakewood, CO | $482,434 | 649 | 46.0 | 55.1 |
| Charlotte-Concord-Gastonia, NC-SC | $305,051 | 601 | 46.6 | 49.4 |
| Miami-Fort Lauderdale-West Palm Beach, FL | $375,856 | 625 | 46.9 | 52.2 |
| Indianapolis-Carmel-Anderson, IN | $245,311 | 607 | 47.1 | 51.5 |
| New York-Newark-Jersey City, NY-NJ-PA | $574,801 | 637 | 47.3 | 52.6 |
| San Francisco-Oakland-Hayward, CA | $274,164 | 637 | 51.9 | 53.7 |
| Phoenix-Mesa-Scottsdale, AZ | $230,795 | 624 | 53.2 | 49.8 |
| Los Angeles-Long Beach-Anaheim, CA | $752,154 | 641 | 58.6 | 53.9 |
| San Jose-Sunnyvale-Santa Clara, CA | $499,811 | 685 | 67.4 | 57.7 |
| National Average | $372,202 | 623 | 59.7 | 46.5 |
"The small number of months in business indicates more startups in an area. Philadelphia, San Antonio, Sacramento, and Orlando were among the leaders. These cities are places where immigrant businesses are growing," Arora explained. "Meanwhile, Washington benefits from Federal investments. The city also is a magnet for young people."
When sorted by Credit Score, San Jose was the leader. Rounding out the Top 25 were: Denver, Las Vegas, Los Angeles-Anaheim, San Francisco-Oakland, San Jose, New York metro, Detroit-Dearborn, Tampa-St. Petersburg, Sacramento, and Portland.
Top 25 Metro areas with the highest applications in 2013
| Top 25 Metro areas with the highest applications in 2013 | Average Annual Revenue | Average Credit Score | Average of Age in Months | Average BizAnalyzer Score |
|---|---|---|---|---|
| San Jose-Sunnyvale-Santa Clara, CA | $499,811 | 685 | 67.4 | 57.7 |
| Denver-Aurora-Lakewood, CO | $482,434 | 649 | 46.0 | 55.1 |
| Las Vegas-Henderson-Paradise, NV | $497,677 | 649 | 39.4 | 53.6 |
| Los Angeles-Long Beach-Anaheim, CA | $752,154 | 641 | 58.6 | 53.9 |
| San Francisco-Oakland-Hayward, CA | $274,164 | 637 | 51.9 | 53.7 |
| New York-Newark-Jersey City, NY-NJ-PA | $574,801 | 637 | 47.3 | 52.6 |
| Detroit-Warren-Dearborn, MI | $730,013 | 637 | 39.4 | 55.5 |
| Tampa-St. Petersburg-Clearwater, FL | $210,676 | 635 | 40.4 | 51.9 |
| Sacramento--Roseville--Arden-Arcade, CA | $419,636 | 635 | 32.1 | 51.7 |
| Portland-Vancouver-Hillsboro, OR-WA | $1,007,506 | 634 | 37.0 | 50.1 |
| Chicago-Naperville-Elgin, IL-IN-WI | $541,797 | 632 | 42.4 | 50.5 |
| Houston-The Woodlands-Sugar Land, TX | $240,033 | 631 | 37.8 | 50.7 |
| Washington-Arlington-Alexandria, DC-VA-MD-WV | $224,982 | 629 | 34.9 | 52.5 |
| Miami-Fort Lauderdale-West Palm Beach, FL | $375,856 | 625 | 46.9 | 52.2 |
| Phoenix-Mesa-Scottsdale, AZ | $230,795 | 624 | 53.2 | 49.8 |
| Atlanta-Sandy Springs-Roswell, GA | $384,282 | 623 | 45.4 | 52.5 |
| Dallas-Fort Worth-Arlington, TX | $374,996 | 622 | 35.2 | 49.9 |
| Philadelphia-Camden-Wilmington, PA-NJ-DE-MD | $216,435 | 621 | 25.7 | 47.7 |
| San Antonio-New Braunfels, TX | $197,535 | 617 | 29.3 | 49.4 |
| Orlando-Kissimmee-Sanford, FL | $195,413 | 616 | 33.6 | 47.6 |
| Jacksonville, FL | $800,638 | 612 | 36.7 | 48.2 |
| Indianapolis-Carmel-Anderson, IN | $245,311 | 607 | 47.1 | 51.5 |
| Seattle-Tacoma-Bellevue, WA | $341,051 | 603 | 36.6 | 49.0 |
| Riverside-San Bernardino-Ontario, CA | $1,215,845 | 602 | 45.5 | 52.1 |
| Charlotte-Concord-Gastonia, NC-SC | $305,051 | 601 | 46.6 | 49.4 |
| National Average | $372,202 | 623 | 59.7 | 46.5 |
"Small businesses in areas where technology is booming, such as San Jose, Denver, Las Vegas, Los Angeles, San Francisco, and New York, tend to have higher credit scores," Arora said. "They are also areas with a long history of innovation and thus have well-established companies with higher credit scores."
About the Biz2Credit Best Small Business Cities in America Study
Biz2Credit analyzed 12,000 businesses with less than 250 employees and less than $10 million in annual revenues from across the country that have been in operation for more than 1 year.