Best cities to open a new business

Buffalo tops our list

Updated November 9, 2023

Reviewed By Ross Martin

Table of contents:

Cities 1 - 3
Cities 4 - 6
Cities 7 - 10
Methodology

Many people dream of opening their own business and more and more Americans are taking that step each year. In 2021, an incredible 5.4 million new business applications were filed^[1]. That growth has begun to slow in many areas, which is why the location in which you decide to launch a new entrepreneurial idea may have an impact on how successful your venture turns out. From financing opportunities to local costs, there are many variables to consider.

The Zebra sought to find the best places to start a new business by analyzing the 50 most populous cities in the U.S. using three data points:

Change in annual business applications: A larger increase in business applications could indicate a positive environment for entrepreneurs.
Cost of office space: As a business starts to grow, paying for commercial office space could impact margins.
SBA loan approvals (by state): Some states may have higher approval rates from lenders than others.

Thinking about starting your own business? Here's our top 10 list of best cities to launch — read on to find out if yours made the cut!

#1: Buffalo, New York

Buffalo is one of the few cities on our list that continues to have an increase in business applications. At a 0.2% positive change, you may find it easier to find a growing community of like-minded individuals who want to start their own venture. And if you need space to grow, the city has one of the lowest office rental rates in the cities we researched. Annual leases average just $18.08 per square foot. The state of New York also ranks fairly high for SBA loan approvals.

Buffalo by the numbers

Change in annual business applications: 0.2%
Cost of office space: $18.08 per square foot
SBA loan approvals: 4,092

#2: Sacramento, California

If you want to be surrounded by your fellow entrepreneurs, Sacramento is the place to be. The city saw a 7.10% increase in business applications last year, which is the highest out of all the cities we analyzed. On top of that, California has the highest number of SBA loan approvals. Office space in Sacramento ranks in the middle of the pack with an annual average price of $24.80 per square foot.

Sacramento by the numbers

Change in annual business applications: 7.10%
Cost of office space: $24.80 per square foot
SBA loan approvals: 6,109

#3: Riverside, California

Like Sacramento, Riverside entrepreneurs can enjoy a higher number of SBA loan approvals thanks to being in California. New business applications have declined slightly, but are only down 2.6% from the previous year. Office space costs are barely higher than average at $28.52 per square foot each year.

Riverside by the numbers

Change in annual business applications: -2.60%
Cost of office space: $28.52 per square foot
SBA loan approvals: 6,109

#4: San Antonio, Texas (tied)

We have a tie for fourth place, starting with San Antonio. Annual office space costs are below average at $23.21 per square foot. Business applications declined a bit in 2022, but by less than 4%. Texas also has a decent amount of SBA loan approvals, coming in at nearly 4,100.

San Antonio by the numbers

Change in annual business applications: -3.90%
Cost of office space: $23.21 per square foot
SBA loan approvals: 4,094

#4: Columbus, Ohio (tied)

Columbus falls in the middle of the pack when it comes to new businesses. Last year, the city experienced an 8.8% decline. However, if your entrepreneurial vision involves an in-person staff, you'll pay just an average of $16.81 per square foot for office space in Columbus. Additionally, Ohio's annual SBA loan approvals totaled 3,661 last year.

Columbus by the numbers

Change in annual business applications: -8.80%
Cost of office space: $16.81 per square foot
SBA loan approvals: 3,661

#6: San Diego, California

San Diego saw a slight dip in business applications (down 3.1%), but that still kept the city in the top 10 for that category. Like other California cities, SBA loan approvals are high at over 6,000 per year. The downside of building a business in San Diego, however, is that office costs are above average. Expect to spend around $33.33 per square foot each year.

San Diego by the numbers

Change in annual business applications: -3.10%
Cost of office space: $33.33 per square foot
SBA loan approvals: 6,109

#7: Tampa, Florida (tied)

Tampa ties with two other cities for seventh place on our list. The city saw just a 2.8% drop in business applications, which is a small amount compared to many other locations. Florida also has a large number of approvals for SBA loans at $4,623. If you plan to rent office space, however, annual costs are slightly above average at $31.19 per square foot.

Tampa by the numbers

Change in annual business applications: -2.80%
Cost of office space: $31.19 per square foot
SBA loan approvals: 4,623

#7: Austin, Texas (tied)

Austin is known for its vibrant startup community, which is no surprise considering annual business applications had one of the smallest drops in the country at just 1.6%. Office space is slightly higher than average at $29.50 per square foot. And in Texas, SBA loan approvals are among the highest in the country at just under 4,100.

Austin by the numbers

Change in annual business applications: -1.60%
Cost of office space: $29.05 per square foot
SBA loan approvals: 4,094

#7: Virginia Beach, Virginia (tied)

Next up for seventh place is Virginia Beach. Annual business applications dropped just 1%, indicating there's still a strong market for new companies. On top of that, office space expenses are quite low. The average price per square foot is just $21.01 per year. SBA loan approvals are lower in Virginia at 974, but that may be due to the state's smaller size compared to other contenders on the list.

Virginia Beach by the numbers

Change in annual business applications: -1.00%
Cost of office space: $21.01
SBA loan approvals: 974

#10: Orlando, Florida

Orlando rounds out our top 10 partially due to the large number of SBA loan approvals in Florida. There was also just a moderate dip in new businesses, with applications dropping 5.4%. However, office leases cost a bit more in Orlando. The average annual square footage cost is just under $29.

Orlando by the numbers

Change in annual business applications: -5.40%
Cost of office space: $28.98
SBA loan approvals: 4,623

Methodology

The Zebra pulled three data points to analyze the top 50 MSAs (by population) in the U.S. related to opening a new business:

Change in annual business applications^[2]
Cost of office space^[3]
SBA loan approvals^[4]

MSA data was used where applicable, and we sometimes substituted city or state data as necessary.

Sources