The pandemic not only dislocated and shuttered many small businesses, but it also created a surge in applications for new businesses, as social distancing and working remotely took hold, according to a report by the small business website lendio.

Citing Small Business Administration data, the lendio report noted that more than 10 million small businesses, with annual revenue reaching $13.3 trillion, opened from 2021 to 2022. Also, one in five startups fail within the first year of being open and close to 50% fail after five years. Also, about 65% are out of business by the 10th year, according to the Bureau of Labor Statistics.  

"The 2020s has been one of the most challenging decades in history for small business owners," lendio said. "The economic impact from 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 faced."

The life span of your business is in many ways determined by the state in which you live and operate, according to an analysis by Lendio. The states with large influxes of migration, reasonable cost of living and local incentive programs tend to be favorable for small businesses, according to the analysis by the Utah-based online loan marketplace for small business owners. Lendio analyzed factors such as tax rates, startup survival rates, cost of living, educated worker migration, loans, funding, consumer spending, and incentive programs to rank which states are best to start a small business.

Lendio used a variety of data from the federal government and nonprofit sources including from the Bureau of Labor Statistics, Census Bureau, Small Business Administration, Council for Community and Economic Research, the Tax Foundation, Bureau of Economic Analysis and the National Science Foundation.

Here is Lendio’s list of the 10 best states to run a small business:

10. Utah

Utah ranks second in approving small business loans, with 12.6 million per 100,000 residents. It also ranked seventh in the amount of venture capital disbursed per $1 million of GDP in the U.S. in 2022 ($15,000). More than half (51.5%) of the state’s startup businesses survive to at least five years. Lendio’s analysis also showed that the Beehive State has seen a 16.3% annual cost-of-living increase, the biggest in the country, as a  result of the influx of residents.