2020 was a big year for new entrepreneurs

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While many small businesses had to get creative to survive amid the coronavirus pandemic, others were being started in record numbers.

In fact, there were more business applications filed in 2020 than any year on record, according to U.S. Census Bureau data. New small businesses will have to lean on that creativity, too, as 20% of small businesses fail within the first year — and roughly 50% by the end of the fifth year.

Still, entrepreneurs across the U.S. saw something appealing about starting a business in 2020, despite the economic conditions. We’ll break that down at the national, industry and statewide levels.

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Entrepreneurs have persisted

2020 was a big year for new entrepreneurs

When the last recession hit at the end of 2007, the number of business applications took a hit for the first time on record (the data became available starting in July 2004).

In 2008, over 76,000 fewer business applications were filed than in the previous year. It wasn’t until 2014 that the total number — nearly 2.7 million — surpassed the 2007 total.

Since 2012, the number of business applications has risen yearly. After late 2016, when unemployment rates dropped — and stayed — below 5%, the number of business applications continued to rise:

  • 2016: More than 2.9 million
  • 2017: Nearly 3.2 million
  • 2018: Nearly 3.5 million

Given that there seemed to be a connection between economic conditions and business applications, one might have expected an unemployment rate of 14.8% in April 2020 would have hampered business applications for a while.

But the opposite happened. In fact, just three months after the highest unemployment rate the country has seen since the Great Depression, entrepreneurs filed the most business applications on record. In July 2020, entrepreneurs filed more than 582,000 business applications.

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Government support helped

2020 was a big year for new entrepreneurs

This increase came amid unprecedented support from the government in the face of challenging economic conditions. With enhanced unemployment benefits and economic impact payments supporting Americans, the personal savings rate shot up. You’d have to go back to 1981 to find a time when Americans had a higher savings rate than they did in March 2020.

All the time spent inside — perhaps with more money saved — could have encouraged people with dreams of becoming an entrepreneur to go for it.

Note: While our research covered the period through December 2020, January 2021 (more than 497,500 business applications) would have been the second biggest month behind July 2020.

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Retail rules

2020 was a big year for new entrepreneurs

With businesses — especially retail businesses — being asked to respond to constantly changing rules around health and safety, it might be a little surprising that retail was the fastest-growing sector. But most of the industry growth came with nonstore retail, which includes retail businesses that people start from home.

Other industries that did well between 2019 and 2020 included:

  • Transporting and warehousing: 35% year-over-year growth, perhaps on the backs of people being home more and potentially getting more items delivered
  • Administrative and support businesses: 27% year-over-year growth

On the other hand, some industries have struggled for business growth. The number of applications for businesses in the mining sector was down 17% year over year, while the real estate sector was down 6%.

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Southern states dominated new business applications

2020 was a big year for new entrepreneurs

While the early summer saw the biggest boom, the business application rush continued through the end of the year. Overall, 2020 saw 24% more business applications than 2019. But when looking at just November and December in both those years, the increase was 36%.

We also took a look at the states that saw the biggest year-over-year increases — or decreases — between 2020 and 2019.

Here are the states that saw an increase in business applications of at least 25% year-over-year from 2019 to 2020:

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16. Arkansas

2020 was a big year for new entrepreneurs

2019 applications: 25,600

2020 applications: 32,280

Year-over-year change: 26.1%

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15. Texas

2020 was a big year for new entrepreneurs

2019 applications: 304,460

2020 applications: 384,350

Year-over-year change: 26.2%

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14. Florida

2020 was a big year for new entrepreneurs

2019 applications: 390,960

2020 applications: 495,480

Year-over-year change: 26.7%

Image Credit: DepositPhotos.com.

13. Tennessee

2020 was a big year for new entrepreneurs

2019 applications: 58,770

2020 applications: 75,100

Year-over-year change: 27.8%

Image Credit: AndreyKrav / iStock.

12. Indiana

2020 was a big year for new entrepreneurs

2019 applications: 53,900

2020 applications: 68,950

Year-over-year change: 27.9%

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11. Maryland

2020 was a big year for new entrepreneurs

2019 applications: 75,580

2020 applications: 97,260

Year-over-year change: 28.7%

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10. North Carolina

2020 was a big year for new entrepreneurs

2019 applications: 103,460

2020 applications: 133,390

Year-over-year change: 28.9%

Image Credit: DepositPhotos.com.

9. Wyoming

2020 was a big year for new entrepreneurs

2019 applications: 18,900

2020 applications: 24,580

Year-over-year change: 30.1%

Image Credit: DepositPhotos.com.

8. Ohio

2020 was a big year for new entrepreneurs

2019 applications: 94,8001

2020 applications: 26,750

Year-over-year change: 33.7%

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7. South Carolina

2020 was a big year for new entrepreneurs

2019 applications: 51,600

2020 applications: 70,890

Year-over-year change: 37.4%

Image Credit: AndreyKrav / iStock.

6. Michigan

2020 was a big year for new entrepreneurs

2019 applications: 94,420

2020 applications: 129,860

Year-over-year change: 37.5%

Image Credit: DepositPhotos.com.

5. Alabama

2020 was a big year for new entrepreneurs

2019 applications: 41,630

2020 applications: 58,500

Year-over-year change: 40.5%

Image Credit: DepositPhotos.com.

4. Illinois

2020 was a big year for new entrepreneurs

2019 applications: 117,340

2020 applications: 170,090

Year-over-year change: 45.0%

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3. Louisiana

2020 was a big year for new entrepreneurs

2019 applications: 54,140

2020 applications: 83,860

Year-over-year change: 54.9%

Image Credit: Getty.

2. Georgia

2020 was a big year for new entrepreneurs

2019 applications: 171,700

2020 applications: 269,100

Year-over-year change: 56.7%

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1. Mississippi

2020 was a big year for new entrepreneurs

2019 applications: 31,530

2020 applications: 50,670

Year-over-year change: 60.7%

This article originally appeared on LendingTree.com and was syndicated by MediaFeed.org.

Image Credit: Getty.

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