Small businesses with fewer than five employees grew over 10% in New York City during the COVID-19 pandemic, according to a report released by State Comptroller Thomas P. DiNapoli. Very small businesses were a key source of new economic activity during the first half of the pandemic in the city, as they accounted for more than 71% of all businesses citywide.
The Business Growth in New York City During the COVID-19 Pandemic report details the growth in New York City’s small businesses, the industries that were most affected, and the areas, namely Brooklyn and the Bronx, that saw the highest increases.
"Across the nation, the pandemic reinvigorated entrepreneurship,” DiNapoli said. “Significant job losses during the COVID-19 pandemic took a toll on the city’s economy, but resilient New Yorkers fueled small business growth. Changes to how people work and how businesses operate, along with federal aid, allowed people to either start a business or expand by providing services more easily online.”
The overall number of businesses rose 6.5% in New York City, compared to 17.4% nationally from the first quarter of 2019 to the first quarter of 2023. The impact of the COVID-19 pandemic on the city likely explains the large gap in growth. Still, small businesses with fewer than five employees increased in the same time period by 10.3%, which largely contributed to an increase in businesses overall.
Companies with more than 1,000 employees in New York City also saw 4.7% growth from the first quarter of 2019 to the first quarter of 2023. Similar to the rest of the nation, this was likely due to their ability to better withstand the financial and operational challenges of the pandemic. Meanwhile, the number of medium-to-larger size companies in the city generally declined over the same period.
Employment among very small businesses increased by 1% from 2019 to 2023, rising to 286,270 jobs, while employment among the largest businesses grew 9.6%, rising to 990,419 jobs. All other business class sizes had employment levels in 2023 that remained below pre-pandemic levels.
Newly created small businesses increased more in the outer boroughs. From 2019 to 2023, the number of very small businesses rose by at least 10% in every borough except Manhattan, with some neighborhoods seeing particularly dramatic increases. In Brooklyn, Bedford Stuyvesant had 35% more businesses, Bushwick had 30% more and Crown Heights North had 27% more. These neighborhoods were also home to many residents working in business services in 2019 like law offices or architecture or engineering firms, which are more easily performed remotely, helping fuel new businesses.
DiNapoli’s report recommends that the city encourage small business growth further by continuing to develop a business-friendly ecosystem, support funding for start-up and growth-stage businesses with a focus on Black, Indigenous and people of color, immigrant communities and women-owned small businesses and to expand access to capital and mentorship for small business owners.
