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40 sourced statistics · updated 2026-10-29

Small business statistics 2026

TL;DR

About 1 in 5 new U.S. businesses closes within its first year: BLS data show 78.9% of private-sector establishments that opened in the year ended March 2025 were still operating in March 2026, so 21.1% had closed. A little more than half close within five years (47.2% of the 2021 cohort survived), and about two-thirds are gone after ten years (34.2% of the 2016 cohort survived).

How many small businesses are there in the US?

The SBA Office of Advocacy counts any independent business with fewer than 500 employees as small. By that definition almost every business in the country is a small business, and most of them have no employees at all.

Small business failure and survival rates

BLS tracks every new private-sector establishment (a single business location) from the year it opens. The figures below are survival rates since birth, as published in March 2026 data; the closure share is simply 100% minus the survival rate. A closure is not always a failure: some owners sell, merge, relocate or retire.

New business formation

Census Business Formation Statistics count applications for an Employer Identification Number (EIN) filed with the IRS. An application is a signal of intent to start a business, not proof that a business opened.

Small business employment and economic share

Small businesses employ close to half of private-sector workers and produce a large share of U.S. output.

Small business financing and credit

The Federal Reserve's Small Business Credit Survey asks firms with 1 to 499 employees how they finance themselves and what holds them back. The 2025 survey had 6,525 responses; it is a convenience sample, not a random one.

Self-employed and nonemployer businesses

A nonemployer business has no paid employees, is subject to federal income tax and has at least $1,000 in receipts. Most are sole proprietors: freelancers, gig workers and one-person service businesses.

Who owns small businesses

Census links business records to owner characteristics through the Annual Business Survey (employer firms) and Nonemployer Statistics by Demographics (firms without employees).

What this means if you are starting out

Survival odds are not fate — they average together every kind of business. Lower your own risk by validating demand before you spend, starting lean and tracking break-even from month one. Our startup cost report, break-even calculator and validation guide are good next steps.

Frequently asked questions

What percentage of small businesses fail in the first year?

About 21%. According to the Bureau of Labor Statistics, 78.9% of private-sector establishments that opened in the year ended March 2025 were still operating in March 2026, so 21.1% had closed. BLS measures closures of business locations, and not every closure is a failure; some owners sell, merge or simply stop.

What percentage of small businesses fail within five years?

A little more than half. BLS data show 47.2% of establishments that opened in the year ended March 2021 were still operating five years later, meaning 52.8% had closed. The SBA Office of Advocacy reports a similar long-run average: 49.2% five-year survival for cohorts from 1994 to 2022.

Is it true that 90% of small businesses fail?

Government survival data do not support a 90% figure over normal planning horizons. BLS shows 34.2% of establishments that opened in the year ended March 2016 were still open ten years later, and 18.6% of the 2006 cohort were still open after twenty years. So about two-thirds close within ten years, and a little over 80% close within twenty.

Why do small businesses fail?

Government data on closures do not record a reason, so there is no official breakdown of causes. Surveys of operating businesses point to the main pressures: in the Federal Reserve's 2025 Small Business Credit Survey, rising costs of goods, services or wages was the most common financial challenge, 77% of employer firms reported rising costs and/or tariff-related costs, and reaching customers and growing sales was the most common operational challenge. Among firms that applied for financing, 22% received none of what they sought. Commonly cited reasons for closing include running out of cash, too few customers, pricing that does not cover costs, and owners choosing to move on.

How many small businesses are there in the US?

There are 36,207,130 small businesses in the United States, according to the SBA Office of Advocacy's 2026 FAQ (based on 2022 Census data). They make up 99.9% of all businesses. 82.3% have no employees, and 6,395,635 have paid staff.

Do restaurants fail more often than other businesses?

Not according to BLS establishment data. In accommodation and food services, 56.3% of establishments that opened in the year ended March 2021 were still operating in March 2026, compared with 47.2% across all private industries. BLS counts locations, so new branches of established chains are included, which may lift the figure compared with independent restaurants alone.

Methodology & citing

Every figure on this page was read directly from a primary source: BLS Business Employment Dynamics establishment survival tables (data through March 2026), Census Bureau Business Formation Statistics, Nonemployer Statistics and Annual Business Survey releases, the SBA Office of Advocacy's February 2026 Frequently Asked Questions About Small Business, and the Federal Reserve Banks' 2025 Small Business Credit Survey. Figures are reported as published; the only calculations are first-year and five-year closure shares (100% minus the BLS survival rate) and the 2025 business application total, which sums Census's 12 published monthly unadjusted values. BLS survival rates describe business establishments (locations) rather than firms, and a closure is not necessarily a failure.

You are welcome to cite these figures; please link to this page and the original source.

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