Archive for the ‘U.S. Small Business Administration’ Category

Small Business Quarterly Bulletin

June 14, 2012 Comments off

Small Business Quarterly Bulletin (PDF)

Source: U.S. Small Business Administration

While small firms with 20-499 employees provided three-quarters of the net employment growth since the end of the downturn, more recently, even the very small firms (fewer than 20 employees) and large firms (500 or more employees) showed solid net increases (Chart 4). Increases were driven by existing firms, as birth and death employment essentially netted each other out leaving little to no impact on the overall employment level. The decline in employment from births over the last decade has been accompanied by a corresponding decline in employment from deaths.

The number of births has risen since the end of the downturn and deaths have declined; when combined they are referred to as business churn. Business churn is needed to keep the economy from stagnating, and churn has been declining. However, the lower churn rate seems to follow the overall decline in the economy by about 18 months.

Overall, the small business trends are positive with the employment increases mentioned above, proprietors’ income up, and business bankruptcies trending down over the last few years.

Veteran-owned Businesses and their Owners—Data from the Census Bureau’s Survey of Business Owners

March 31, 2012 Comments off
Source:  U.S. Small Business Administration
Veteran-owned businesses in general. Census estimated that in 2007:
• There were 2.45 million businesses with majority ownership by veterans.
• 491,000 of these firms were employers, and 1.956 million were non-employers.
• These veteran-owned firms had sales/receipts of $1.220 trillion, 5.793 million employees, and an annual payroll of $210 billion.
• Veteran-owned firms represented 9.0 percent of all U.S. firms.
• 12.2 percent of all owners of SBO-respondent firms were veterans.
• 8.3 percent of all respondent veteran owners had service-connected disabilities.

Small Business GDP: Update 2002-2010

February 2, 2012 Comments off

Small Business GDP: Update 2002-2010 (PDF)
Source: U.S. Small Business Administration

Despite producing a somewhat smaller share of the overall GDP than it did a decade ago, small businesses continue to be incubators for innovation and employment growth during the current recovery. Small businesses produced 46 percent of the private nonfarm gross domestic product (GDP) in 2008 (the most recent year for which the source data are available to make these estimates). 1 That is down from the 48 percent share of GDP produced by small businesses in 2002. Preliminary information indicates that the weak business conditions through early 2009 affected small businesses about as much as large businesses resulting in only a minor change to the shares. 2 However, starting in late 2009 and early 2010, small businesses appear to have been more negatively affected by business conditions than large businesses. Corporate profits recovered more quickly than non-corporate profits in 2010. Since a larger share of corporations are large businesses, that likely resulted in a further weakening of the small business share of GDP.

Analysis of Small Business Innovation in Green Technologies

October 21, 2011 Comments off

Analysis of Small Business Innovation in Green Technologies
Source: U.S. Small Business Administration


  • Small innovative firms are 16 times more productive than large innovative firms in terms of patents per employee. Small innovative firms with fewer than 500 employees produced 27 patents per 100 employees, compared with 1.6 patents per 100 employees in large firms with 500 or more employees.
  • Patents of the small firms in the study were cited 79 percent more by recent patents than is typical for other patents of the same age and patent classification. Patents of the large firms were cited just slightly above average. The small firms in the study also outperformed the large firms in patent originality, generality, and growth.
  • U.S.-based organizations were responsible for 43 percent of U.S. patents in green technologies in 2005-2009, while Japanese organizations were responsible for 32 percent. No other country had more than 6 percent.
  • Green patents form a higher percentage of the portfolios of small firms with at least one green patent (20 percent on average) than of the large firms’ portfolios (1.5 percent).
  • Green patents from small firms are cited 2.5 times as frequently as green patents from large firms.
  • While small firms account for about 8 percent of all U.S. patents in the U.S. innovative firm database, they account for 14 percent of green technology patents. Small firms account for more than 32 percent of the patents in both smart grids and solar energy, and 15 percent of patents in batteries and fuel cells.
  • Eighty percent of the “prolific” inventors—those with five or more recent green patents with a citation index of 1 or more—from small green technology firms had previously worked at large companies, or large government or university labs.

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Small Business Lending: Second Quarter 2011

October 17, 2011 Comments off

Small Business Lending: Second Quarter 2011 (PDF)
Source: U.S. Small Business Administration

Economic recoveries in the past have been volatile; however, this recovery has been marked by more volatility and prolonged persistence while small business owners try to regain a foothold. Financial market conditions in the first half of the year were to some extent supportive of economic growth as borrowing conditions eased further for both businesses and consumers. Demand for commercial and industrial loans by large and medium-size firms increased; however, small business lending remained suppressed.

Total small business loans outstanding (loans under $1 million), continued to decline during the first half of 2011, but at a decreasing rate. Loans outstanding to small businesses at the end of the second quarter totaled $607 billion (see chart). The rate of decline (0.4 percent) in the second quarter is the slowest since the downturn which began in 2008. In a nutshell, the analysis shows that small business lending continues to have a difficult time emerging from the recession, which results in a much slower pace of economic recovery.

Developments in Women-Owned Businesses, 1997-2007

October 5, 2011 Comments off

Developments in Women-Owned Businesses, 1997-2007
Source: U.S. Small Business Administration

A new study by the Office of Advocacy looks at developments in women-owned businesses between 1997 and 2007, using data from the Census Bureau’s Surveys of Business Owners. This dynamic period was marked by rapid growth overall, with a slowdown during the 2000-2001 recession, followed by strong growth in 2002-2007. Women’s share of total U.S. firms increased from 26 percent in 1997 to almost 29 percent by 2007.

The study, Developments in Women-owned Business, 1997-2007, compares the characteristics of firms owned by women with those owned by men, as well as those that are publicly held or not identifiable by the gender of their owners. The study finds that 12 percent of women-owned businesses were employers in 2007, while 88 percent were nonemployers. Women-owned businesses accounted for 4 percent of total business receipts in 2007.

Women-owned firms employed 6.4 percent of the 118.6 million employees of employer firms in 2007. The top four sectors for employer firms owned by women were retail trade, professional services, health care and social assistance, and accommodations. In five states and the District of Columbia, the number of women-owned businesses per 1,000 persons was greater than 30 in 2007.

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Measuring and Modeling the Federal Income Tax Compliance Burden of Small Businesses

September 22, 2011 Comments off

Measuring and Modeling the Federal Income Tax Compliance Burden of Small Businesses (PDF)
Source: U.S. Small Business Administration

Federal tax compliance burdens increase as the size of a small business increases and vary by industry and other factors. This makes sense, as the complexity of business operations is likely to be positively correlated with the size of business receipts. Small businesses spend more than 5.5 billion hours fulfilling their income tax obligations

SBA — Small Business Quarterly Bulletin — Second Quarter 2011

August 22, 2011 Comments off

SBA — Small Business Quarterly Bulletin — Second Quarter 2011 (PDF)
Source: U.S. Small Business Administration

Recovering economies generally have not experienced smooth acceleration. This recovery is no different with speed bumps in the labor market. The first half of 2011 saw real GDP decelerate from its 2010 growth rate and unemployment rates remain elevated above rates of the last few decades.

Small firms are doing their part to expand the economy. With recent increases in manufacturing and trade sales, the demand for loans by small firms increased in each of the first two quarters of 2011. Commercial and industrial loans outstanding (which include loans to large firms) also increased in both quarters of 2011.

Beyond Bankruptcy: Does the Bankruptcy Code Provide a Fresh Start To Entrepreneurs?

July 8, 2011 Comments off

Beyond Bankruptcy: Does the Bankruptcy Code Provide a Fresh Start To Entrepreneurs? (PDF)
Source: U.S. Small Business Administration

While the bankruptcy system has helped certain small businesses maintain operations, credit access issues after bankruptcy persist. These issues increase the probability that firms will not even seek credit after a bankruptcy.

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Factors Affecting Entrepreneurship among Veterans

July 5, 2011 Comments off

Factors Affecting Entrepreneurship among Veterans (PDF)
Source: U.S. Small Business Administration

Are veterans more likely to become entrepreneurs than otherwise demographically similar individuals? Using one measure of entrepreneurship, self-employ- ment, both past research sponsored by SBA’s Office of Advocacy and current data from the Bureau of Labor Statistics indicate that veterans have had and do have a higher rate of self-employment than do non-veterans. What could account for this finding? The authors investigate whether military service has a statistically significant impact on veteran entrepre- neurship using three complementary data sources. The analysis tests the hypothesis that military service imparts some unique training or acculturation that makes veterans more likely to become self-employed than otherwise similar individuals.

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Small Business Quarterly Bulletin — First Quarter 2011

May 27, 2011 Comments off

Small Business Quarterly Bulletin — First Quarter 2011 (PDF)
Source: U.S. Small Business Administration

Small businesses are increasingly showing strong signs of growth as they lead the economic recovery.

For the first time in 19 quarters (since mid-2006), banks are reporting an increase in small businesses’ demand for loans. There is also evidence that the credit market is thawing as commercial and industrial loans increased during the last two quarters.

Financing is one factor contributing to expanding employment in existing establishments). This expansion is the largest source of new jobs in the economy. The number of jobs created by new firms in their first quarter of existence continues to test new lows. In the short term this is not much of a labor market worry because even in good times, new firms create only a small percent of new jobs. In addition, they are mostly netted out by the job losses from establishment deaths, which are also declining (as are business bankruptcies). However, a continuing trend of declining job turnover is a worry; this is not a cyclical trend but one that has been going on for over a decade. Job gains and job losses fell from just below 9 million each (around 2000–2001) to just below 7 million each, a decade later. This is a long-term concern for the economy as a strong “velocity” of job changes in the aggregate is believed to lead to increasingly better job matches which would drive productivity and a reduction in long-term joblessness.

A Small Business Guide to Exporting: Part 1 – Getting Started

May 20, 2011 Comments off

A Small Business Guide to Exporting: Part 1 – Getting Started
Source: U.S. Small Business Administration

America’s largest companies have been doing global business for decades. And with growth in global networks and communications, new markets have opened up for small business too. Since 2003, America’s small business exports have grown about 80%. They now account for nearly $500 billion in annual sales.

Exporting represents an enormous opportunity for small business. 96% of the world’s consumers live outside the U.S. representing some two thirds of the world’s purchasing power. Exporting gives small businesses the opportunities to reach new markets, increase sales, maintain global competitiveness, and create jobs.

There are also socio-economic benefits for small businesses that embrace exporting, including better opportunities for employee advancement, a faster growth rate, and an 8.5% less likelihood of going out of business than other domestic businesses.

However, small business still represents only about 30% of export revenues, and more than half of small business exporters only ship to one country. And according to a recent Small Business Export Survey*, 40% of those businesses surveyed expressed concern about entering new overseas markets because they weren’t sure where to start.

See also: A Small Business Guide to Exporting: Part 2 – Getting Financing

How Do Firms Choose Legal Form of Organization?

April 21, 2011 Comments off

How Do Firms Choose Legal Form of Organization? (PDF)
Source: U.S. Small Business Administration, Office of Advocacy

In this study, we analyze the firm’s choice of legal form of organization (“LFO”). We use data from the Kauffman Firm Surveys (“KFS”) to test the standard financial life-cycle theory of the firm, which posits that a firm starts out as a proprietorship and then changes to a partnership or corporation as it grows larger, more complex and needs financing beyond the means of the founder’s personal wealth. Our findings largely contradict this theory.

First, we find that only about one in three firms begins as a proprietorship, while almost as many begin as limited-liability companies and as corporations. Moreover, this distribution is remarkably stable over the first four years of the firm’s life. Less than one in ten firms changes LFO during its first four years. Those that do change LFO disproportionately move to a more complex form, primarily from proprietorship to a form with limited liability. So, at least for those firms that do change LFO, we do find some support for life-cycle theory. Our analysis of the firm’s initial choice of LFO reveals that a firm is more likely to choose a more complex LFO when the firm is larger as measured by employees or assets, when it is more complex as proxied by its employee benefit plans, when it offers trade credit, when it uses a business credit card for financing, and when its primary owner is more educated; but is more likely to choose a less complex LFO when it is more profitable, has more tangible assets, uses a personal credit card or loan from family for financing and when its primary owner is female.

Our analysis of the decision to change LFO finds that a firm with a more educated primary owner is more likely to change LFO while a firm with an older or female primary owner is less likely to change LFO. A firm that grows faster in terms of employment, that offers trade credit, or that initially organized as a partnership is more likely to change LFO while a firm that initially organized as an LLC or S-corporation is less likely to change LFO.

This study makes seminal contributions to the literature on entrepreneurship: (i) by providing the first empirical evidence on a firm’s initial choice of LFO at start-up; (ii) by providing the first rigorous empirical evidence on the determinants of a firm’s initial choice of LFO; (iii) by providing the first empirical evidence on the incidence of changes in LFO during the start-years of a new firm; (iv) by providing the first empirical evidence on the determinant of changes in LFO during the start-up years of a new firm; and (v) by providing new evidence on differences in growth across organizational forms.

Beyond Bankruptcy: Does the Bankruptcy Code Provide a Fresh Start To Entrepreneurs?

April 7, 2011 Comments off

Beyond Bankruptcy: Does the Bankruptcy Code Provide a Fresh Start To Entrepreneurs? (PDF)
Source: U.S. Small Business Administration, Office of Advocacy


+ At some point in the previous seven years, owners of 2.6 percent of firms filed for bankruptcy.

+ Previously bankrupt firms perform similarly to firms that have not filed for bankruptcy. They are no more burdened than other small firms by problems such as poor cash flow, high health insurance costs, or excessive taxes, and they attain similar firm sizes, as measured by employment. The firms in existence several years after bankruptcy are evidence that small firms can survive and continue beyond a bankruptcy filing.

+ A bankruptcy negatively affects a firm’s ability to obtain loans, especially at reasonable interest rates, even controlling for credit scores. These firms have about a 24 percent higher likelihood of being denied a loan and are charged interest rates that are more than 1 percentage point high-er than those charged other businesses.

+ The credit rationing of bankrupt small firms leads to a class of discouraged borrowers who are significantly less likely to even apply for a loan.

+ The report finds some interesting differences in credit access across minority-owned businesses. Black- and Hispanic-owned businesses are charged higher interest rates and are more likely to be denied loans, while Asian-owned businesses essentially mirror U.S. averages with respect to interest rates and denials.

+ Full Report (PDF)

Small Business — Banking Study 2010

February 16, 2011 Comments off

Banking Study 2010
Source: U.S. Small Business Administration, Office of Advocacy

The Small Business Lending in the U.S published by the Office of Advocacy, U.S Small Business Administration since 1994 provides information on the lending activities of depository institutions. Two types of data are used in the analysis—the Consolidated Reports of Condition and Income (Call Reports starting in June 1994) and the Community Reinvestment Act (CRA starting in 1998) reports.

In 2005 the data was expanded to include savings banks and savings and loans associations, in addition to commercial banks, and geographic coverage was expanded to include American Samoa, Guam, Puerto Rico, and the U.S. Virgin Islands.

This seventeenth annual banking study for the first time includes cooperative banks in addition to existing depository institutions and gives a brief review on the institutions lending patterns in 2009 and 2010. The rankings and performance of these lenders are summarized and organized by state/ territory, loan size, number of loans, and asset size of the institution.


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