NEW YORK STATE — A new report by state comptroller Thomas DiNapoli details the impact of small businesses on New York’s economy; they generate nearly $1 trillion in sales and revenues and had more than 3.7 million employees at over 422,000 establishments in 2023, the most recent year for which data is available. 

New York ranked fourth among states in the number of small businesses, and third behind California and Florida for its share of small businesses, but trailed the rest of the country in some key metrics, including small business creation and employment, the report found.

In addition:

Data from the U.S. Census Bureau indicate there were 422,137 small businesses (defined as those with fewer than 500 employees) operating across New York in 2023, comprising 98.9 percent of all businesses in the state.

Over 80 percent of all New York businesses had fewer than 10 workers. Small businesses employed 3.7 million people, close to 45 percent of the state’s jobs, earning an average of $60,579 in annual pay in 2023.

The small business industries that provide the greatest total employment are health care and leisure activities, making up 33.7 percent of small business employment in the state.

Small business owners are more diverse than those of large businesses: in New York, 23 percent are majority-owned by women and 26 percent by minority business owners —compared to less than 4 percent and 3 percent, respectively, for large firms.

In 2023, the percentage of jobs at small businesses averaged 47.5 percent nationally and was 44.7 percent in New York.

Fewer new small businesses

The report found that small business growth in New York has lagged the nation: between 2001 and 2023, the number of small business firms grew 9.5 percent in New York compared to 14.2 percent in the rest of the nation, so New York ranked 22nd among states.

The COVID-19 pandemic hit New York’s small business economy particularly hard in 2020 and 2021, with a net decrease of 7,350 businesses in 2020 and 11,600 in 2021. In contrast, the net number of small businesses in the rest of the nation grew in both 2020 and 2021, likely because industries such as leisure, hospitality and retail services, which were affected to a greater extent by the pandemic shutdowns, have high concentrations of small businesses in the state. From 2022 to 2023, New York’s small business firms grew 0.7 percent, about two-thirds of the rate at which small business firms grew across the rest of the country (1.05 percent).

Business applications across the state have been underperforming national rates for more than a decade. Between 2015 and 2019, both New York and the rest of the nation saw modest but steady growth in business applications. In 2020, following the onset of the pandemic, applications in New York fell to near 2015 levels, but then surged through the subsequent entrepreneurial boom. However, growth still remained below national trends.

Starting a small biz isn’t easy

In July 2025, the National Federation of Independent Business (NFIB) Research Center released its survey report, titled “Small Business Problems and Priorities.” It asked small business owners to assess the severity of 75 potential business problems on a scale of 1 (“a critical problem”) to 7 (“not a problem.”)

The survey found that most challenges faced by small business owners are prevalent across the nation. For example, the cost of health insurance and supplies ranked first and second both in New York and nationwide. Three issues stood out as more prevalent in New York. According to the responses from 285 small business owners in New York, state taxes on business income, laws described as “unreasonable government regulations,” and electricity costs rank as greater concerns for small-business owners operating in New York than those operating in the rest of the country.

In addition to the regulations imposed by the state, local requirements can impact small businesses. For example, a third of small businesses in New York City report waiting six months or longer to open due to the various licenses, permits and waivers from as many as 15 different city agencies that must be obtained to operate.

As net small business job creation declines, New York has simultaneously seen a steady rise in “non-employer businesses,” firms that do not directly employ any workers, DiNapoli’s office said. Many non-employer businesses participate in the gig economy, a market characterized by short-term contracts or freelance work, often facilitated via digital platforms. Short-term home sharing, ride-share and delivery applications have caused a surge in non-employer businesses in New York’s leisure and accommodations industry, and various new professional services like social media management, content creation, as well as personal finance and consulting, are becoming more commonly offered by individual proprietors.

State help is there

DiNapoli’s report highlights several programs available in New York offering financial support to small businesses. In 2022, the state launched over $1 billion in new programs that provide grants and loans to small businesses to improve access to capital. Though many startups encounter financial barriers in establishing their business, New York has programs to support and invest in the network of statewide alternative lenders, DiNapoli’s office said. 

Recently launched was EXPRESS NY (aka Expediting Processes and Regulations to Enable Streamlined Services), a new effort to identify unnecessary, outdated or burdensome regulations for three key areas. The effort includes a link to a portal that invites New Yorkers to submit recommendations for supporting small businesses by identifying “issues that make it difficult for businesses to launch, serve customers or grow.”

The DiNapoli report, “Challenges Facing Small Businesses in New York,” can be found at www.bit.ly/4sQkQmf.