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Delaware Today
By the People, for the People
New Data Shows Where US Businesses Fail Fastest
More than one-fifth of new businesses close within the first year, with the highest failure rates in Washington, D.C. and Tennessee.
Apr. 12, 2026 at 4:09pm
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A minimalist still life of premium business objects symbolizes the challenges and uncertainties facing new enterprises in the current economic climate.Delaware TodayAccording to a recent analysis of Labor Department data, 22.1% of American private-sector businesses fail within one year of opening. The failure rate rises to 65.3% after 10 years, but there are significant disparities between states. Washington, D.C. had the highest first-year failure rate at 32.9%, followed by Tennessee at 29.3%. On the other end, Washington state had the lowest rate at 17.5% in the first year, though this grew to 68.3% by year 10.
Why it matters
Conditions remain challenging for businesses in the U.S., with surveys showing an increasing number are concerned about inflation and cautious on hiring and investments amid growing economic unease. Understanding where businesses are struggling the most can help policymakers and business leaders address the underlying issues.
The details
LendingTree's report, based on an analysis of Bureau of Labor Statistics data, revealed the states with the highest first-year failure rates were Washington, D.C. (32.9%), Tennessee (29.3%), Delaware (27.2%), Oregon (26.7%), and Oklahoma (26.5%). On the other end, the states with the lowest first-year failure rates were Washington (17.5%), South Carolina (17.7%), Louisiana (19.6%), California (19.7%), and Iowa (19.8%). By industry, the information sector had the highest first-year failure rate at 28.4%, followed by professional/scientific/technical services at 25.5% and administrative/waste services at 24.3%.
- The data analyzed covers the one, five, and 10 years ending in March 2025.
The players
LendingTree
A financial services marketplace that conducted the analysis of Labor Department data.
Matt Schulz
LendingTree's chief consumer finance analyst.
Neil Bradley
Executive vice president of the U.S. Chamber of Commerce.
What they’re saying
“One of the biggest problems is going in without a real focus on what you're trying to accomplish and who you're trying to serve. Starting a business is hard and incredibly risky. If you don't have a plan for the audience you're targeting and what problem you're helping those people solve, your odds of success just get smaller and smaller.”
— Matt Schulz, Chief consumer finance analyst, LendingTree
“Views of the national and local economies have turned more pessimistic, concerns over inflation have jumped, and plans for future hiring and investment dropped markedly. Taken together, this suggests small business owners are worried about the future state of the economy, but it remains to be seen if this will translate into changes in their current operations.”
— Neil Bradley, Executive vice president, U.S. Chamber of Commerce
The takeaway
This data highlights the significant challenges facing new businesses, especially in certain states and industries, underscoring the need for policymakers and business leaders to address the underlying factors driving high failure rates to support entrepreneurship and economic growth.
