Increase in small businesses: A new U.S. Treasury report reveals a surge in small business start-up applications this year, reflecting a rebound in confidence after a difficult post-pandemic period. The uptick in applications comes at a time when inflationary pressures are easing. According to the latest Treasury analysis, the U.S. is seeing an average of 430,000 new business applications per month in 2024, a 50% increase compared to 2019, the last pre-COVID year under President Donald Trump’s administration.
Hiring potential soars
Applications from companies with high hiring potential have risen to 140,000 per month, a 30% increase over 2019. Since 2019, small businesses have been responsible for 70% of net new jobs in the United States, up from 64% in the previous cycle. Vice President Kamala Harris is scheduled to announce an expansion of small business tax breaks on Wednesday in New Hampshire. The proposed plan includes increasing the tax deduction for startups to $50,000 from the current $5,000, even though the average start-up cost is around $40,000. Working with U.S. Treasury Secretary Janet Yellen, Harris has been working to improve credit resources for small businesses, especially in minority and underserved communities. This includes more than $8 billion invested in 162 community financial institutions through the Emergency Capital Investment Program during the pandemic. “Small businesses are the backbone of our communities,” Harris stressed in a statement. “Under President Biden’s administration, we have seen a record 19 million new applications from small businesses, including from underserved areas,” she added.
Boosting small business confidence
The Treasury report notes that several indicators of small business sentiment have improved recently, thanks to declining inflation.
The National Federation of Independent Business’s Small Business Optimism Index has seen a rebound this year, reaching its highest level since February 2022. Similarly, the U.S. Chamber of Commerce’s Small Business Index hit a post-pandemic high in the second quarter of 2024. While tight credit conditions have posed challenges, the report says easing credit standards are contributing to growing optimism in the sector.(With contributions from Reuters)
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