New York City surpassed Silicon Valley to become the top city for small business, according to Biz2Credit's annual study of the Top Small Business Cities in America. New York's growth has been fueled by the booming real estate market and the construction industry, banking and finance (including fintech), and the city's thriving technology sector.
New York City overtook last year's small-business city leader, San Jose, the hub of Silicon Valley, which dropped to the No. 4 spot on the list. Technology companies in Silicon Valley are still thriving, but it's the supplementary companies that are faced with challenges of growing. The skyrocketing cost of living in Silicon Valley impedes the profits of many firms. Commercial rents, housing and labor costs weigh down non-tech businesses dramatically. Furthermore, taxes are higher in California, in general. Lacking that economic balance in the area has prevented San Jose from reigning as the leader in top small-business cities this year.
Historically a melting pot, New York is a diverse metropolitan area, which translates well for entrepreneurs of all ethnic backgrounds. Of the approximately 8.5 million people living in the city, more than one-third are foreign-born, the highest rate in more than a century, according to data from the New York City Department of City Planning. Immigrants bring an entrepreneurial spirit and diligent work ethic to America's shores.
"The density and diversity of New York City is unparalleled to anywhere in the country," said Steven Cohen, president of Excelsior Growth Fund, a nonprofit Community Development Financial Institution that provides loans and advisory services to New York small businesses. "There are large numbers of women, immigrant and minority entrepreneurs, and they are growing at record numbers."
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"There's a great entrepreneurial spirit and community in New York City that really reflects the global nature of the city," added Cohen, whose organization also connects small firms to a wide range of business resources. "You have businesses in all industries and so many businesses and resource providers in one place. This means it's easier to network and connect with mentors, business support organizations and other business owners."
Following New York are Miami-Fort Lauderdale (No. 2), Austin (No. 3), San Jose (No. 4) and Los Angeles (No. 5). For this analysis, Biz2Credit analyzed nearly 30,000 small businesses with fewer than 250 employees. Firms identified in the study must have been in operation for at least a year and had less than $10 million in annual revenues. The Top 25 Cities for Small Business in 2017 are: