Aug 4, 2023 - Business

Houston business activity remains healthy despite application decline

Data: U.S. Census Bureau; Map: Kavya Beheraj/Axios

About 18.6 new business applications per 1,000 residents were filed across the Houston metro area in 2022, totaling more than 135,000 applications, per new Census Bureau and IRS data.

  • That's a 10% drop from 2021, when there were 20.6 applications per 1,000 residents, but Houston still ranked 24th among large metro areas for new applications.

Why it matters: New business applications are an important measure of an area's perceived economic health. If lots of people are trying to start new companies in a given city, it's a sign that they're bullish on the area's prospects, Axios' Kavya Beheraj and Alex Fitzpatrick report.

  • The word "startup" tends to evoke buzzy Silicon Valley tech ventures. But young companies of all stripes, from stores and restaurants to software and manufacturing firms, play a big economic role.
  • As of 2021, more than 66.7 million Americans worked for companies with fewer than 100 employees, and those companies posted nearly $3.6 trillion in annual payroll, per census data.

The big picture: Just over 5 million new business applications were filed nationwide in 2022, or 15.1 for every 1,000 residents.

  • That's down about 6.6% from 2021, when nearly 5.4 million applications were filed nationwide, or 16.2 for every 1,000 residents.

By the numbers: Fort Bend County saw 18,583 applications, or 20.9 new business applications per 1,000 residents, and Harris County saw 92,970 applications, or 19.4 applications per 1,000 residents.

Yes, but: Business applications can be a sign of economic optimism; they're not a barometer of economic activity or of business success.

Meanwhile, the Small Business Administration in Houston has been seeing growth in existing businesses this fiscal year, which ends Sept. 30.

  • Tim Jeffcoat, the SBA Houston district director, says there's been an increase in SBA-guaranteed loans, despite the higher interest rates. Jeffcoat says that signifies that businesses are wanting to grow.

What they're saying: "It's rare that we hear from a business that says, 'I'm in trouble and I need help or I'm gonna have to close.' We always hear those. But in terms of right now, it's rare. It's exactly the opposite," Jeffcoat tells Axios.

  • "Virtually every business we meet — and my office personally touches probably about 60,000 to 70,000 small businesses a year — almost every one of them is either looking for new growth opportunities, because their business is stable and they want to grow, or they're already growing and they're looking for capital."

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