New York Small Businesses Face Headwinds Amid Regulations

Report shows New York lags national trends in small business growth and employment

Mar. 18, 2026 at 8:52am

Got story updates? Submit your updates here. ›

A new state report highlights the outsized role of the New York small business sector, which accounts for nearly 99% of all businesses and 45% of the state's workforce, but is underperforming compared to national trends in key measures like business creation, job growth, and entrepreneurial activity. The report cites taxes, regulations, and rising costs as major barriers holding back small businesses in New York.

Why it matters

Small businesses are the backbone of New York's economy, but the state's underperformance in this sector compared to national trends poses risks for long-term economic growth and job creation. Addressing the regulatory, cost, and access to capital challenges facing New York's small businesses is critical to supporting entrepreneurship and strengthening the state's overall business climate.

The details

The report shows New York small business growth has lagged the nation, with the number of firms increasing just 9.5% between 2001 and 2023, compared to 14.2% nationally. The pandemic amplified these challenges, with New York seeing a net loss of small businesses in 2020 and 2021. Key industries like professional services, retail, and hospitality account for the largest shares of small firms, while health care and leisure sectors employ the most small business workers. New York small businesses also tend to be smaller on average than national peers. The top concerns for small business owners include the cost of health insurance, supplies, state taxes, regulations, and energy costs - all of which rank as more significant issues in New York than other states.

  • The report covers small business trends from 2001 to 2023.
  • New York saw a net loss of small businesses in 2020 and 2021.

The players

New York

The state of New York, where small businesses account for 98.9% of all businesses and 45% of the workforce, but have faced challenges in growth and performance compared to national trends.

Got photos? Submit your photos here. ›

What’s next

State officials have launched initiatives to support small businesses, including over $1 billion in grant and loan programs and efforts to reduce regulatory burdens. However, the report concludes that more needs to be done to address the barriers facing New York's small business sector.

The takeaway

New York's small business landscape is central to the state's economy, but faces structural disadvantages compared to national peers, including higher costs, regulatory hurdles, and access to capital challenges. Addressing these barriers through targeted policy changes will be critical to supporting entrepreneurship, job creation, and long-term economic growth in New York.