Rohit Arora
Rohit Arora

San Jose best small business city – survey

San Jose is America’s best city for small business, an analysis by Biz2Credit shows.

Biz2Credit employed a weighted average of factors including average annual revenue, credit score, business age, cash flow, debt-to-income ratio, and business owners’ personal credit scores. Small business was defined as one with less than 250 employees or one with less than $10 million in annual revenue.

It is not surprising Silicon Valley tech firms are doing well, but the spillover benefits non-tech businesses too, CEO Rohit Arora said.

“There is so much money being made in San Jose and the rest of the Silicon Valley. Even non-tech companies are benefiting because they provide goods and services to technology companies.

“The overall growth in the region’s industries including construction, logistics, restaurants and hospitality, which owe their success to the booming tech sector.”

San Jose placed in the top five in each of average credit score, average annual revenue, and Biz2Credit’s proprietary BizAnalyzer score, which assesses local business factors. San Jose’s 6.2 percent GDP growth rate is more than double the national average of 2.4.

New York finished second, but it has some advantages over San Jose, Arora explained.

“New York and San Jose are battling it out for supremacy in technology, while New York has the edge in sectors such as financial services and travel and tourism.”

New York was hurt by high fixed and variable costs.

“What prevents New York from achieving the top ranking, despite high average revenues, is the high cost of doing business, especially high rents, real estate and construction costs in Manhattan,” Arora added. “Because it is expensive to live in the New York metro area, salaries have to be higher in order for small firms to be competitive for talent.”

Other factors hurting New York are gas prices, parking, bridge and tunnel fees, municipal violation charges, and payroll and sales taxes. A future $15 minimum wage will also hurt small businesses, Arora believes.

Miami-Fort Lauderdale showed healthy improvement, Arora said.

“Miami is thriving because of the construction boom and its growth as a tourist destination. It (also) acts as a gateway to Latin America. If relations continue to normalize with Cuba, its strategic importance will only continue to grow.”

Riverside-San Bernardino, CA went the other way, dropping from top spot last year to sixth in 2016.

“In the last year, water shortages and struggles in agriculture have impacted the local economy in and around Riverside,” Arora said. “Meanwhile, EB-5 funding from China — an immigrant investor program established by Congress to stimulate the U.S. economy — has slowed. Many small businesses got funded through Chinese investors.”

Biz2Credit’s top 25 cities for small business


1. San Jose, CA
2. New York
3. San Francisco-Oakland
4. Miami-Fort Lauderdale
5. Los Angeles
6. Riverside-San Bernardino, CA
7. Atlanta
8. San Diego
9. Chicago
10. Seattle
11. Portland
12. Houston
13. Detroit
14. Orlando
15. Tampa-St. Petersburg
16. Dallas-Fort Worth
17. Washington, DC
18. Phoenix
19. Denver
20. Las Vegas
21. Charlotte
22. Philadelphia
23. San Antonio
24. Indianapolis
25. Memphis