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Biz2Credit Identifies 2014's Best Small Business Cities in America

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:

  1. San Jose-Sunnyvale-Santa Clara, CA
  2. Detroit-Dearborn, MI
  3. Denver, CO
  4. Los Angeles-Long Beach-Anaheim, CA
  5. San Francisco-Oakland, CA
  6. Las Vegas, NV
  7. New York metro area
  8. Atlanta, GA
  9. Washington, DC metro area
  10. Miami-Fort Lauderdale-West Palm Beach, FL
  11. Riverside-San Bernardino, CA
  12. Tampa-St. Petersburg, FL
  13. Sacramento, CA
  14. Indianapolis, IN
  15. Houston, TX
  16. Chicago, IL
  17. Portland, OR
  18. Dallas-Fort Worth, TX
  19. Phoenix-Scottsdale, AZ
  20. Charlotte, NC
  21. San Antonio, TX
  22. Seattle-Tacoma, WA
  23. Jacksonville, FL
  24. Philadelphia, PA
  25. 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 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 2013Average Annual RevenueAverage Credit ScoreAverage of Age in MonthsAverage 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 2013Average Annual RevenueAverage Credit ScoreAverage of Age in MonthsAverage 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.

Lending Index Infographic

Infographic For Best Small Business Cities

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