Millions of Americans took the plunge into entrepreneurship last year, making 2022 the second most popular year on record for Americans seeking business ownership since 2004.
Americans submitted five million new small business applications in 2022, a notch behind the 5.4 million applications filed in 2021, the most popular year on record, according to data released by the U.S. Census. The Census publishes monthly data on business formation applications, with July 2004 being the earliest month this data became available.
In a press call on Tuesday, officials touting the stats noted that entrepreneurs of color significantly contributed to the uptick in entrepreneurship. In particular, Hispanic entrepreneurs started businesses 44 percent faster than their non-Hispanic counterparts over the last decade, according to a meta-analysis conducted by SCORE, a New York-based nonprofit focusing on entrepreneurial mentorship and education.
Despite the rocky economic conditions anticipated in 2023, officials are optimistic about maintaining this momentum. In the press call, Bharat Ramamurti, the deputy director of the National Economic Council, outlined the government’s strategy, which focuses on the following four categories to help small businesses “keep this boom going.” Its worth noting that some of these efforts are already long underway.
- Expand access to capital: While nodding to programs like the State Small Business Credit Initiative and the Small Business Administration’s own signature 7(a) loan program, SBA Administrator Isabella Guzman says that the agency is in the middle of finalizing “critical reform efforts to incentivize long-term capital and small dollar loans, so that it can expand competition in the lending marketplace.” The Biden administration also bumped up the SBA’s authorized lending levels for its flagship programs by $9.5 billion in its most recent budget.
- Invest in small business support services: While the SBA isn’t known for its sterling customer experience, its something the agency is looking to improve on. The FY 2023 budget carved out room for the SBA to create standard customer experience measures, such as for the agency’s loan, grant and contracting programs.
- Support small business contractors: Despite the downward trend of small businesses within the federal contracting base, the SBA continues to work with entrepreneurs to connect founders with contracting opportunities. The agency has previously signaled that it is working to clamp down on contract bundling, the practice of consolidation that makes contracts so large that small and medium-size businesses cannot vie for them.
- Leverage the tax code so that large corporations pay their share: This might sound quaint, but President Biden has proposed rebalancing the tax scales many times since the start of his presidency. He claims that getting corporations to pay their fair share will “help level the playing field” for small businesses.
A continuation of interest in entrepreneurship heading into 2023 is hardly a given. The rate of entrepreneurship over the past two years was likely goosed by a number of factors including historically low interest rates, pandemic-fueled layoffs, increased personal savings rates and the Great Resignation. And while more Americans are entertaining entrepreneurship, their success itself isn’t guaranteed: a long cited statistic suggests around 90 percent of startups fail within a decade of launching, according to research from the Startup Genome, a San Francisco-based policy advisory and research organization.
Still, the government is looking to nurture these new and existing entrepreneurs. Guzman said during the press call that the SBA is working across the government to increase competition, as the agency tries to increase small business engagement in the federal procurement process. Guzman adds that the SBA will continue work on building its lending initiatives to help support small businesses.
“In 2023, we’re committed to ensuring our small businesses–both those new 10.5 million firms as well as established businesses-can continue to get what they need to succeed,” says Guzman. “We’re going to make sure that we can focus on revenue-growth opportunities–that’s what small businesses are focused on,” adds Guzman, noting that the president’s new infrastructure, broadband, clean energy initiatives can help.
This content was originally published here.
