Biz2Credit identifies San Francisco as “the top city for small business” in annual ranking

Newcomers to the Top 25 list include Pittsburgh, Milwaukee, Kansas City, and Las Vegas

Biz2Credit has identified San Francisco as the “Best Small Business City in America,” based on average annual revenues, credit scores, age of business, and Biz2Credit’s proprietary BizAnalyzer score, which factors in costs, including real estate, labor costs, and taxes, among others.

Biz2Credit’s Top 25 Cities for Small Business study is an annual review of the financial performance of small firms in major U.S. markets. Biz2Credit’s data science team reviewed the financial performance of more 50,000 credit applications from small and midsized businesses across the country for the full prior year (2022). For this analysis, Biz2Credit defined small businesses as firms having fewer than 250 employees or less than $10 million in annual revenues.

Last year’s top city, San Jose, dropped to seventh place this year, while No. 2 Baltimore fell off the top 10. Additionally, four cities on last year’s ranking fell off last year’s list entirely (previous year’s rank in parathesis): Lakeland, FL (16); Port St. Lucie, FL (18); Houston (20); and Cleveland (23).

This year’s rankings included several metro areas that were not ranked among the Top 25 Cities for Small Business last year: Pittsburgh (rated No. 10), Milwaukee, Kansas City, and Las Vegas.

The Biz2Credit BizAnalyzer Score factors in the local business climate, including rents, labor costs, and local tax rates. Biz2Credit examined the financials of over 50,000 companies that submitted applications for small business loans and financing in 2022.

According to Biz2Credit’s new study, the Top 10 Best Small Business Cities in 2022 were:

1. San Francisco, CA

2. Sacramento, CA

3. San Diego, CA

4. New York, NY

5. Boston, MA

6. Los Angeles

7. San Jose, CA

8. Portland, OR

9. Seattle, WA

10. Pittsburgh, PA

“Technology hubs, such as San Francisco, San Jose, Boston, New York, and Seattle, rated highly as the tech sector thrived throughout 2022, despite layoffs from some large corporations,” said Rohit Arora, CEO of Biz2Credit and Biz2X, and one of the nation’s leading experts on small business finance and FinTech. “The tech boom fuels other industries including real estate, construction, logistics, food and accommodation. It is a case of the rising tide floating all the boats.”

Overall, the weighted average revenues for small businesses increased from $376,000 in 2021 to $441,000 during the 12 months of 2022. Average credit scores for business owners likewise increased to 642 from 633 in 2021. These indicators reflect how the small company economy has rebounded since the pandemic.

The Top 25 Cities for Small Business overall this year are:

2023 Rank (2022 Rank)

1. San Francisco, CA (5)

2. Sacramento, CA (12)

3. San Diego, CA (11)

4. New York, NY (3)

5. Boston, MA (4)

6. Los Angeles, CA (6)

7. San Jose, CA (1)

8. Portland, OR (8)

9. Seattle, WA (14)

10. Pittsburgh, PA (Unranked)

11. Denver, CO (10)

12. Washington, D.C. (7)

13. Riverside, CA (22)

14. Baltimore, MD (2)

15. Milwaukee, WI (Unranked)

16. Kansas City, MO (Unranked)

17. San Antonio, TX (24)

18. Austin, TX (17)

19. Philadelphia, PA (25)

20. Providence, RI (9)

21. Tampa, FL (15)

22. Nashville, TN (21)

23. Orlando, FL (19)

24. Las Vegas, NV (Unranked)

25. Miami, FL (13)

“Interestingly, the cities new to the list are relatively lower cost cities, rather than expensive places like San Francisco, San Jose, New York, and Boston,” Arora said. “The cost structures in places like Pittsburgh, Milwaukee, and Kansas City are much more affordable than in larger urban areas.” The Top 10 metro areas by Annual Revenue were:

1. San Francisco: $870,000

2. San Jose: $827,000

3. Austin, TX: $755,000

4. New York: $701,000

5. Los Angeles: $696,000

6. Denver: $682,000

7. Sacramento: $682,000

8. Baltimore: $672,000

9. Boston: $661,000

10. San Antonio: $660,000

“Cities with large technology sectors are the ones that had the highest revenues,” Arora explained. “All of the cities in the top 10 averaged higher than $660,000.”

The Biz2Credit analysis also examined Age of Business (in months), an indication of startup activity. The #1 spot with the youngest age of business was Milwaukee (55 months).

The top 10 cities with the youngest Age of Business (in months) were:

1.  Milwaukee (55)

   2.   Birmingham, AL (56)

       Philadelphia (56)

   4.   San Jose(57)

   5.   Detroit (58)

         Denver (58)

         Austin, TX (58)

         Greenville, SC (58)

   9.   Sacramento (59)

         Oklahoma City (59)

“Age of business is an indication of entrepreneurship and new business growth. Our analysis found that  companies are sprouting in places like Milwaukee, Birmingham, AL, and Greenville, SC, which had not made Biz2Credit’s list of Best Small Business Cities before,” Arora said.

When sorted by credit score, tech hubs such as San Francisco, Seattle, and New York had the highest numbers. The nationwide average was 642, up from last year’s 633 average credit score, based on submissions to Biz2Credit’s platform.

1. San Francisco: 660

2. Seattle: 657

3. New York: 656

4. Boston: 655

5. Los Angeles: 654

6. Providence, RI: 653

7. San Jose: 652

8. Denver: 649

9. Sacramento: 647

10. Portland: 647

“Despite inflation, many small businesses did well in 2022, and their owners’ rising credit scores are a reflection of that,” Arora said.

The metropolitan areas with the Most Small Business Loan Applications in 2022 were:

1. New York

2. Atlanta

3. Miami

4. Los Angeles

5. Chicago

6. Houston

7. Dallas

8. Philadelphia

9. Orlando

10. Phoenix