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Kentucky No. 29 Best State to Start a Small Business

Post-pandemic America is an outstanding place to start a small business because a staggering 10 million new small businesses began in 2021 and 2022—a record for such applications, according to a statement released on Jan. 17, 2023, from the White House.

small businesses hit record heights in 2022

The 2020s have been one of small business owners’ most challenging historical decades. The economic impact of the global pandemic continues to ripple through the American and global economies. Inflation, remote working, and the unprecedented migration of educated workers to new locations have been just a few of the challenges that small businesses face. Amid such paradigm shifts in how—and where—Americans work and live, Lendio commissioned this study to see the state of the small business landscape across the country.

Key Findings

Lendio, a free online service that helps business owners find the right loans within minutes, explored trends in nine metrics critical to small business owners’ success in 2023’s rapidly changing and uncertain landscape. These metrics included small business lending, cost of living, real estate data, educated worker migration, corporate tax rates, state-level incentives for business owners, and more. Our key findings include the following:

  • Top states – Texas, Florida, and Ohio rank top in our list due to low taxes, mass migration of educated workers, sufficient business funding, and the fact that more than half of all startups had survived at least five years in each state, which was above average.
  • Bottom states – Hawaii, Maine, and New Hampshire are the bottom three states due to low business funding and venture capital availability, limited local incentive programs, high tax rates, and high cost of living.
  • The highest states are those that experienced large influxes of migration with reasonable living costs. The availability of business funding, venture capital and local incentive programs also impacted the rankings.

Top 10 Best States for Small Businesses

10. Utah

Utah boasts 12.6 million small business loans per 100,000 residents, the second-highest in the U.S. It also had $15,000 in VC funding per $1 million GDP, ranking No. 7 in the U.S. in 2022. Utah did not rank higher on our list because it has become an increasingly popular destination. As a result, the biggest cost of living increase in the country is 16.3% annually.

9. Georgia

Georgia is also a great place for businesses, as it is within the top states with the smallest business loans approved—over 10 million small business loans per 100,000 residents. Georgia has seen an influx of 81,406 people move in, making it the sixth-best state in this category. Although the housing prices remain reasonable, Georgia has the second-highest growth in the cost of living.

8. South Carolina

Half of all startups in the Palmetto State have survived at least five years, and the state government offers 77 different incentives for small business owners—only two states offer more incentives than South Carolina. The state has a low 5% corporate income tax rate. In addition, housing prices and cost of living are among the lowest of all states, and 84,030 people moved in in 2022, making it the 4th-hottest place to relocate.

7. Oklahoma

This state boasts some of the most favorable local incentives in the country for business owners, with 75 inventive programs in total. Housing prices and cost of living are lower compared to other states. Combined with a low 4% corporate income tax rate, this creates an environment many entrepreneurs will find attractive.

6. Colorado

You may have the best chance in Colorado to land a small business loan. Colorado ranks No. 1 in the U.S. for the issuance of small business loans, with 13 million small business loans per 100,000 residents. It also has the 6th highest amount of venture capital per $1 million GDP. With 55,768 educated workers moving here and a 5% corporate income tax rate, business owners can find a good place to start a small business.

5. North Carolina

North Carolina has been a hot place for in-migration, with 99,796 people relocating there in 2022 (the 3rd highest in the U.S.). Businesses here have an above-average five-year survival rate. The state also has a low corporate tax rate of 3%. With low housing costs, business owners find it an attractive location to start and run a small business.

4. Massachusetts

It’s no wonder tech-savvy Massachusetts gets the most venture capital disbursed per $1 million of GDP, ranking No 1. in the U.S. The state offers 74 different incentives for business owners. Massachusetts businesses are also more likely to survive beyond five years than many other states. On the flip side, it has one of the highest median housing values in the U.S. and is seeing more people leaving (57,000)—rather than moving to—the Bay State.

3. Ohio

Ohio has no corporate income tax rate. Even with the state’s gross receipt tax rate, which is not strictly comparable to the corporate income tax rate, it’s still considered a low-tax state. Ohio is also among the top states with small business loans approved per 100k residents. With very low housing costs and good local incentive programs, Ohio is a good place for small businesses to settle.

2. Florida

Florida ranks second-best state for small businesses due to a low corporate tax rate (6%) and the mass migration of consumers and companies to the state since COVID-19. The Sunshine State sees more than half of its startup businesses survive to at least five years. It’s also a top recipient of small business loan dollars (11th compared to other states). Its entrepreneurs earned nearly $2 billion in 7a loans and $732 million in 504 loans from the U.S. Small Business Administration in the fiscal year 2022.

1. Texas

Texas is the best state to start a business. Businesses in Texas consistently land loan dollars for their operations, with nearly $3 billion in small business loans approved in total, coming in second after California. Of all businesses started in 2017 in the state, over half survived five years of operations, outlasting those in many other states. According to Census Bureau data, nearly 100,000 people with bachelor’s degrees moved into Texas in 2021, making it a prime location for educated entrepreneurs to spread their wings. Beyond just workers, Texas has become one of the most popular places for Americans to relocate—thanks, in part, to its lack of a state income tax.

Final Thoughts

The state where your business operates directly impacts your ability to run your company effectively. As an entrepreneur, you get to decide which factors matter most to you.

Texas consistently performed in the top tier for business owners, earning it a No. 1 spot for its top small business loan dollars, mass migrations of educated workers and consumers, and reasonable housing cost. Meanwhile, California, the District of Columbia, New Hampshire, and Hawaii ranked last partly because of their high costs of living and housing, fewer incentive programs for businesses, and fewer workers with bachelor’s degrees than in many other states.

Wherever you work, each state presents opportunities and challenges. Navigate those factors successfully and you can run a competitive, impactful business. Do the right research. Decide which criteria matter most. Make sure you’ve got the capital to build your dreams. Then take on calculated risks to start something great with products and services that benefit all of us.


We used publicly available data from various federal government and nonprofit sources to identify the best and worst states for small businesses in 2023. We used a Z-score distribution to scale each metric relative to the mean across all 50 states and Washington, D.C.. We examined nine factors, including:


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