Biz2Credit Ranks Top Cities for Small Biz by Revenues, Credit Score

top cities for small business growth

What is the best city in America for small business growth?

According to a newly-released survey from Biz2Credit, it’s San Jose, Calif., which edged out New York City to achieve the number one ranking.

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Biz2Credit, an online marketplace for small business funding, analyzed more than 55,000 businesses across the country in its annual Best Small Business Cities in America survey. To qualify for inclusion, businesses had to have fewer than 250 employees, less than $10 million in annual revenues and have been in operation for more than one year.

To determine the top cities for small business growth, Biz2Credit uses a weighted average that includes annual revenue, credit score, the age of business (in months), cash flow, debt-to-income ratio and the business owner’s personal credit scores.

The site crowned San Jose with the envious title of Best Small Business City in America because it scored in the top five in average credit score, average annual revenue, and Biz2Credit’s proprietary BizAnalyzer score, which takes into account local economic factors, such as operational costs and tax rates.

“There is so much money being made in San Jose and the rest of the Silicon Valley,” said Biz2Credit CEO Rohit Arora, in a prepared statement announcing the survey results. “Even non-tech companies are benefiting because they provide goods and services to technology companies. The overall growth in the region’s industries, including construction, logistics, restaurants and hospitality, owe their success to the booming tech sector.”

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Arora cited San Joses’ GDP growth as another factor.

“At 6.2 percent, its GDP growth far outpaces the national GDP growth of 2.4 percent,” Arora said.

New York Finishes Second; Growth Likely in Miami

Although New York City led other cities in average annual revenue, it finished second due to the high cost of doing business, according to Arora.

“What prevents New York from achieving the top ranking, despite high average revenues, is the high cost of doing business, especially high rents, real estate and construction costs in Manhattan,” Arora said. “Because it is expensive to live in the New York metro area, salaries have to be higher for small firms to be competitive for talent.”

Other cities finishing in the top five include San Francisco, Miami and Los Angeles.

Arora sees Miami holding a unique opportunity for growth, thanks to the burgeoning relationship between the United States and its neighbor to the south, Cuba.

“Miami is thriving because of the construction boom and its growth as a tourist destination,” Arora said. “Additionally, it acts as a gateway to Latin America. If relations continue to normalize with Cuba, its strategic importance will only continue to grow.”

Top Cities for Small Business Growth in 2016

The Top 25 Cities for Small Business in 2016 are:

  1. San Jose, Calif.
  2. New York City
  3. San Francisco-Oakland
  4. Miami-Fort Lauderdale
  5. Los Angeles
  6. Riverside-San Bernardino, Calif.
  7. Atlanta
  8. San Diego
  9. Chicago
  10. Seattle
  11. Portland, Ore.
  12. Houston
  13. Detroit
  14. Orlando, Fla.
  15. Tampa-St. Petersburg, Fla.
  16. Dallas-Fort Worth
  17. Washington, DC
  18. Phoenix
  19. Denver
  20. Las Vegas
  21. Charlotte, N.C.
  22. Philadelphia
  23. San Antonio
  24. Indianapolis, Ind.
  25. Memphis, Tenn.

Top Cities by Annual Revenue

top cities for small business growth by annual revenue

The Top 10 metro areas by Annual Revenue are:

  1. New York ($1,421,959)
  2. Riverside-San Bernardino, Calif. ($1,045,820)
  3. San Jose, Calif. ($801,064)
  4. Seattle ($702,693)
  5. Los Angeles ($612,415)
  6. Tampa-St. Petersburg, Fla. ($606,833)
  7. Miami-Fort Lauderdale ($571,014)
  8. Chicago ($548,548)
  9. Washington D.C. ($547,296)
  10. San Francisco-Oakland ($535,998)

Top Cities by Age of Business

top cities for small business growth by age of business

Philadelphia ranked first based on the category Age of Business (in months), followed by Memphis, Tenn., Riverside-San Bernadino, Calif., Orlando, Fla. and Charlotte, N.C.

Indianapolis, Ind., San Antonio, Phoenix, Denver and Detroit rounded out the top ten.

Of interest, Biz2Credit looked at 500 companies in Philadelphia that applied for loans and found that nearly 70 percent (336) came from start-up companies — a percentage much higher than any other city on the list.

“The growth of new businesses is a reflection of Philadelphia’s resurgence, particularly around the bustling walkable Center City district,” Arora said. “Center City is a hub for office and retail business, dining, arts and culture, entertainment, healthcare, education, hospitality and tourism. Philadelphia also benefits from its proximity to top schools, such as the University of Pennsylvania, Villanova, and Temple, which can provide entrepreneurial-minded talent.”

Top Cities by Credit Score

top cities for small business growth by credit score

San Jose was first on the list when sorted by Credit Score, followed by New York, Chicago, Orlando, Fla., Miami-Fort Lauderdale, San Francisco-Oakland, San Diego, Tampa-St. Petersburg, Fla., Los Angeles and Houston.

“Small businesses in areas where the technology sector is booming, such as San Jose, Los Angeles, San Francisco and New York, tend to have higher credit scores,” Arora said. “There is also a correlation between higher credit scores and businesses with longer tenure. Many of the cities in the top 10 were represented by longer operating businesses.”

View an infographic showing the survey results.

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Paul Chaney Paul Chaney is a Staff Writer for Small Business Trends. He covers industry news, including interviews with executives and industry leaders about the products, services and trends affecting small businesses, drawing on his 20 years of marketing knowledge. Formerly, he was editor of Web Marketing Today and a contributing editor for Practical Ecommerce.

3 Reactions
  1. Focusing on revenue predisposes the list toward more affluent/expensive areas. Are there any less subjective measures that would be more representative of small to mid-size cities?

    • Not in this particular study, or so it appears. Robert, you may want to search the site for other studies that highlight small, less affluent cities.