SBA Hot Topic Tuesday – Small Businesses Support More Than Half of Rural Employment

September 5, 2023

Delaney Sexton
Contributing Editor

SBA Hot Topic Tuesday – Small Businesses Support More Than Half of Rural Employment

The Federal Reserve Bank’s Small Business Credit Survey shows that 15% of all small businesses with employees are in rural areas. Though rural small businesses make up a small portion of all small businesses, they operate 84.8% of all establishments in rural counties according to a new report from the SBA Office of Advocacy. Rural small businesses also account for 54.3% of employment in rural areas. Small businesses in rural areas have an average of 8.5 employees.

In contrast, small businesses make up 82.5% of all establishments in metropolitan areas. Small businesses account for 45.5% of employment in metropolitan areas, and metropolitan small businesses employ an average of 9.5 people.

Even though small businesses employ a majority of workers in rural areas, rural employment by small businesses has grown slowly compared to total employment. Between 2012 and 2019, small business employment only grew by 1%. This only amounted to rural small business employees growing from 7.5 million to 7.6 million people during the given period.

For big businesses, rural employment increased by 12.9%. Metropolitan employment by small businesses grew by 11.4%, and metropolitan employment by big businesses grew by nearly 20%. Because of the faster growth rate, large businesses caused the share of rural employment by small businesses to decrease from 57.2% in 2012 to 54.3% in 2019.

SBA lenders have helped get nearly $4.72 billion out to rural small businesses in fiscal year 2023. SBA data shows that rural small businesses received 8,494 7(a) loans and almost $3.88 billion. Under the 504 loan program, rural small businesses received 938 loans worth $840.65 million in fiscal year 2023.

SBA Office of Advocacy Report
SBA Lending Data
Small Business Credit Survey, Federal Reserve Banks