New figures from a study by LendingTree indicate the number of new business applications across America in 2020 has surpassed the figure from the previous year’s total by mid-October.
New business applications reached over 3.4 million new applications in 2020 up from last year’s 3.4 million figure. Even with the nation experiencing the worst economy since the Great Depression, new business applications have surpassed 2019’s figures. Overall business applications growth was triggered following the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law on March 27.
Businesses Starting at Record Pace in 2020
However, the data indicates high-propensity business applications have declined. Only 35% of 2020 business applications through mid-October were from high-propensity businesses. High-propensity businesses are companies with a high rate of business formation that include a corporate entity, hire employees, and offer planned wages. In fact, the percentage of high-propensity business applications has fallen in all 50 states since 2006.
Additional findings of the study indicate:
- This year saw some 1.26 million new business applications for high-propensity businesses.
- The number of weekly business applications for non-store retailers grew by four times, from 5,070 to 20,370 since March.
- In the first 13 weeks of 2020, an average of nearly 74,000 businesses applied for Employer Identification Numbers (EINs) a week. From the following week through mid-October EIN applications average was close to 89,000 a week.
- The week of July 12 saw the peak for business applications for non-store retailers. In the following 10 weeks, business applications fell to an average of about 15,400 a week.
- Between the week of Dec. 29, 2019, and the week of March 15, 2020, prior to CARES Act, average weekly applications were 6,600 for non-store retail businesses. From March 22, 2020, to Oct. 3, 2020, the weekly average application was nearly 13,200 non-store retail business.
What’s Driving Entrepreneurship?
The provision of the additional $600 weekly in unemployment insurance helped the personal savings rate reach nearly 34% in April, the highest on record might have given some the financial breathing space they needed to set up a business. An additional incentive includes the tax provision that allows a deduction of up to 20% of qualified business income for owners of certain businesses
Opening e-commerce shops is the most popular business in 2020. These include businesses such as electronic shopping, mail-order houses and direct selling.
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When circumstances get hard, people find ways to get through them. I’m not surprised to see people opening solopreneur ventures to sustain themselves during 2020.