SBA’s Frequently Asked Questions Updated

The Small Business Administration (SBA) Office of Advocacy recently released an update to its “Frequently Asked Questions” (FAQs). The SBA estimates that there are now 26.8 million small businesses in the United States. Addressing small businesses' importance to the U.S. economy, the SBA provides data on small business firm survival, owner demographics, health care questions, regulations and procurement.

Following is a summary of the FAQs:

How important are small businesses to the U.S. economy?
Small firms:
• Represent 99.7% of all employer firms.
• Employ about half of all private sector employees.
• Pay more than 45% of total U.S. private payroll.
• Have generated 60 to 80% of net new jobs annually over the last decade.

What is the survival rate for new firms?
Two-thirds of new employer establishments survive at least two years, and 44% survive at least four years, according to a recent study.

How are small businesses financed?
Commercial banks and other depository institutions are the largest lenders of debt capital to small businesses.

What is the role of women, minority, and veteran entrepreneurs?
• Of the 23 million non-farm businesses in 2002, women owned 6.5 million businesses.
• In 2002, minorities owned 4.1 million firms that generated $694 billion in revenues and employed 4.8 million people.
• Male veterans’ self-employment rates were higher than those of non-veterans from 1979 to 2004.

How do regulations affect small firms?
Very small firms with fewer than 20 employees annually spend 45% more per employee than larger firms to comply with federal regulations.

How many businesses open and close each year?
Estimates for businesses with employees indicate there were 649,700 new firms and 564,900 closures in 2006.

For a complete copy of the Office of Advocacy’s updated FAQs, visit http://www.sba.gov/advo/stats/sbfaq.pdf.