A new report from State Comptroller Thomas DiNapoli confirms that New York’s small business economy is among the largest in the nation — but also one of the slowest growing. The data points to a structural problem two decades in the making, and policymakers are finally moving to address it.
New York’s small businesses employ 3.7 million people, generate nearly $1 trillion in annual economic activity, and account for 98.9% of all businesses in the state. By any measure, they are the engine of the economy — and by nearly every growth metric that matters, they are losing ground to the rest of the country.
A new report by State Comptroller Thomas P. DiNapoli details how vital small businesses are to New York’s economy, generating nearly $1 trillion in sales and revenues with more than 3.7 million employees at over 422,000 establishments in 2023. New York ranked fourth among states in the number of small businesses and third behind California and Florida for its share, but trailed the rest of the country in some key metrics, including small business creation and employment.
That gap between scale and momentum is the central tension the report puts on the table — and it is a tension that has been building for more than two decades.
The Growth Gap Is Not New — But It Is Getting Harder to Ignore
The report found that small business growth in New York has lagged the nation: between 2001 and 2023, the number of small business firms grew 9.5% in New York compared to 14.2% in the rest of the nation, ranking the state 22nd among all states. A nearly five-percentage-point gap accumulated over more than twenty years signals something more structural than a temporary correction.
The pandemic made things considerably worse. The COVID-19 pandemic hit New York’s small business economy particularly hard in 2020 and 2021, with a net decrease of 7,350 businesses in 2020 and 11,600 in 2021. In contrast, the net number of small businesses in the rest of the nation grew in both 2020 and 2021, likely due to the fact that industries such as leisure, hospitality, and retail services — which were affected to a greater extent by the pandemic shutdowns — have high concentrations of small businesses in the state.
Recovery has been modest at best. From 2022 to 2023, New York’s small business firms grew 0.7%, about two-thirds of the rate at which small business firms grew across the rest of the country at 1.05%. The state is recovering — just more slowly than everywhere else.
The employment picture mirrors the formation data. Small businesses employed 3.7 million people in New York, close to 45% of the state’s jobs, earning an average of $60,579 in annual pay in 2023. In 2023, the percentage of jobs at small businesses averaged 47.5% nationally — compared to 44.7% in New York. The state is not just producing fewer businesses relative to the nation. It is also extracting less employment from the ones it has.
What Is Holding New York’s Entrepreneurs Back
The report does not shy away from identifying the barriers. DiNapoli noted that job growth and new business formation are trailing national trends, and rising costs and regulatory pressures continue to weigh on owners.
That assessment is backed up by independent survey data. According to a survey by the National Federation of Independent Business, state taxes on business income, unreasonable government regulations, and electricity costs rank as greater concerns for small business owners operating in New York than for those operating in the rest of the country.
The Small Business Optimism Index for New York small businesses came in at 95.6 in the summer of 2025 — 2.3 points below the national average, with the decline largely driven by negative sales expectations, employment plans, and economic expectations among New York small business owners. Ashley Ranslow, NFIB’s State Director for New York, put the challenge plainly: “Small businesses in New York are resilient and adaptable, but rising costs and an unforgiving regulatory environment continue to stifle their optimism.”
The regulatory friction is not abstract. In New York City, some businesses report waiting six months or longer to open, navigating approvals from as many as 15 agencies. More than one in four employers surveyed said reducing regulations would be the single most helpful action the state could take.
Access to capital compounds the challenge further, particularly for the entrepreneurs who make up a significant share of New York’s small business population. The report found greater diversity among small business owners compared to larger firms, with 23% majority women-owned and 26% minority-owned — far higher than large business ownership rates. Research indicates access to capital and other financing resources is often identified as a key reason for low rates of business ownership among women and people of color. In other words, the entrepreneurs most likely to face capital barriers are the ones New York has in the greatest abundance.
Adding to near-term pressure, DiNapoli warned that new challenges, like tariffs, have forced owners to make sacrifices and difficult choices. The external headwinds arrive at a moment when New York’s small business sector is already operating with less cushion than its national counterparts.
Mayor Mamdani’s $80M Future Fund: The City’s Direct Response
The Comptroller’s report landed in a policy environment that is actively moving to close the access-to-capital gap. One day before the report’s publication, Mayor Zohran Mamdani launched the citywide expansion of the NYC Future Fund — an $80 million public-private loan program with a structural design built specifically around the barriers DiNapoli’s data identifies.
Mayor Mamdani, Deputy Mayor for Economic Justice Julie Su, and Department of Small Business Services Commissioner Kenny Minaya announced the citywide launch of the revamped NYC Future Fund, a loan program designed to expand access to affordable financing for seasonal and growing small businesses, with a particular focus on immigrant-, minority-, and women-owned businesses that have long faced barriers to accessing capital.
The revamped Future Fund increases its total funding to $80 million, up from a $10 million pilot that distributed just $1.2 million to four businesses. The structural changes to the program are significant and targeted. Minimum loan amounts have been reduced from $100,500 to $25,000. Interest rates have been lowered from 9% to 7.5%. Monthly repayment rates have been reduced from a flat 9.5% of revenue to as low as 2% of monthly revenue depending on loan size and business needs. The minimum annual revenue required for eligibility has been lowered from $300,000 to $50,000.
That last change alone opens the program to a far broader universe of small businesses — particularly early-stage operators and entrepreneurs who have been building incrementally, often without access to traditional bank financing. The NYC Future Fund operates as a public-private partnership between the City of New York and local Community Development Financial Institutions, including Community Reinvestment Fund USA, Accompany Capital, Grow America, and Pursuit. The pilot phase was supported by philanthropic funding from JPMorganChase and TD Bank.
Mayor Mamdani framed the initiative in explicit equity terms: “Small businesses are the backbone of New York City’s economy and the heart of our neighborhoods. But many entrepreneurs — especially immigrant and working-class New Yorkers — have been locked out of the affordable capital they need to grow. Our revamped NYC Future Fund will change that.” Applications are open now at nyc.gov/futurefund.
Albany Is Also Moving — EXPRESS NY Takes Aim at Red Tape
Capital access is only one side of the problem. Regulatory friction is the other, and state government has begun moving on that front as well. After announcing an initiative as part of the State Executive Budget for Fiscal Year 2027 to review state regulations, the Executive announced the launch of EXPRESS NY — Expediting Processes and Regulations to Enable Streamlined Services — a new effort to identify unnecessary, outdated, or burdensome regulations across three key areas affecting small businesses. The initiative includes a public portal where New Yorkers can submit recommendations for identifying regulations that make it difficult for businesses to launch or expand.
DiNapoli issued a direct call for urgency in tandem with the report’s findings: “The state and local governments should continue to look for ways to support small businesses by easing their entry into markets and helping them thrive in New York.”
What the Numbers Mean for New York’s Economic Future
The convergence of DiNapoli’s report, the Future Fund launch, and the EXPRESS NY initiative marks a rare moment of simultaneous policy action at both the city and state level around a problem that has compounded quietly for more than two decades. New York’s small business landscape is central to the state’s economy but faces structural disadvantages compared to national peers — including higher costs, regulatory hurdles, and access-to-capital challenges that, without targeted policy intervention, risk pushing the state further behind in business formation, job creation, and long-term economic growth.
New York has the entrepreneurial talent. Approximately 28.4% of New York small businesses are minority-owned, and the state leads nationally in the diversity of its business ownership population. The ingredients for sustained small business growth are present. The infrastructure to convert that talent into competitive growth rates has, until now, been inconsistent and underfunded.
Whether the Future Fund’s $80 million commitment and Albany’s regulatory review translate into measurable improvements in business formation and employment growth is a question the data will answer over the coming years. DiNapoli concluded that continued efforts to ease regulations and support entrepreneurs will be key to helping small businesses thrive and keeping them competitive with the rest of the country. For the 422,000 small businesses currently operating across New York — and the 3.7 million people whose livelihoods depend on them — the window for closing that gap is open. Whether it stays open depends on what comes next.
