Houston Saw Spike in New Business Applications in ’20
Despite the economic downturn during the early stages of the pandemic, Houston entrepreneurs saw a window of opportunity to launch something new.
A report from LendingTree ranks the Houston metro area No. 1 in new-business applications in Texas during 2020. With a 37.4% increase in new-business applications from 2019 to 2020, Houston not only outranks Austin and Dallas but takes 20th place among the nation’s 100 largest metros.
The Greater Houston area racked up 118,183 new-business applications in 2020, up from just 85,998 new-business applications in 2019, according to the U.S. Census Bureau.
“The pandemic has created so much financial chaos for so many people, and that uncertainty surely spurred many Americans to take the plunge,” said Matt Schulz, Chief Credit Analyst at LendingTree. “Some folks did it out of necessity because of income or job losses. Some folks did it to feel more secure, as the idea of relying on one source of income just didn’t make sense anymore for a lot of people. Others likely did it because they’d wanted to for years but never felt the time was right.”
While not everyone who filed an application would move forward to form a business, the increase indicates that a growing number of Houstonians were looking to start one in 2020.
Nationally, despite COVID-19 directives and stay-at-home restrictions, the retail trade sector experienced the biggest growth among major industries at 59.7%.
“So many companies have made it so easy to sell online that people feel good about taking the plunge,” Schulz explained. “Setting up an online store is generally simpler, quicker and less expensive than ever, so the barriers to entry that once scared potential entrepreneurs away from opening a new store aren’t the obstacles that they once were.”
Two other sectors did not fare as well. Mining and real estate were the only industries to experience a decline in new applications between 2019 and 2020. Both sectors had trouble adjusting to the restrictions that came with the pandemic.
Though metro data isn’t yet available for 2021, the Census Bureau says business applications continued to climb nationwide last year, up by 600,000 compared with 2020 totals. The Bureau also forecasts a 0.3% increase in business formations, or roughly 30,000 new businesses in 2022.
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