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I've gotten to know all different types of small business owners over the course of my career. Below, I outline the actual demographics of small business owners in the U.S. We'll explore who owns most of the small businesses, how much they make, and how they finance their businesses.
| Business owner demographic | Businesses owned (millions) | Share of all businesses | Share of U.S. population |
|---|---|---|---|
| Women | 14.0 | 40.4% | 50.8% |
| Men | 19.2 | 55.4% | 49.5% |
| White | 26.6 | 76.8% | 75.1% |
| Minority (all groups) | 13.0 | 37.6% | 42.1% |
| Hispanic | 5.6 | 16.2% | 19.8% |
| Black or African American | 4.6 | 13.3% | 13.5% |
| Asian | 3.4 | 9.9% | 6.6% |
| American Indian or Alaska Native | 0.4 | 1.2% | 1.2% |
| Native Hawaiian or Pacific Islander | 0.1 | 0.3% | 0.4% |
| Veteran | 1.7 | 4.8% | 4.9% |
Source: U.S. Small Business Administration (SBA)
Who Owns America's Small Businesses
Small business owners make up the vast majority (99.9%) of the businesses in the U.S. They also produce about 43.5% of the U.S. economy's gross domestic product (GDP). In the last five years, small businesses accounted for more than half of the net new jobs in the U.S.
So who are the entrepreneurs who drive such a large portion of the U.S. economy?
The entrepreneurship ecosystem is incredibly diverse. There are 36 million small businesses in the U.S.; women-owned businesses account for roughly 40%, and minority-owned businesses account for 37%. There are millions of Black-owned businesses, Hispanic-owned businesses, Asian-owned businesses, and more, adding to that number.
What stands out to me, after working with so many small business owners, is how uneven financing spreads out. Some of the most talented entrepreneurs struggle to get small business financing because of bad credit or simply because they don't know where to look. This makes them more likely to lean on personal savings, which can strain cash flow.
How Many People Are Starting Businesses
Small business formation is booming.
In August 2026, there were 531,728 new small business applications in the U.S., a 7.8% increase from July 2026.
Lots of entrepreneurs start businesses, but fewer make it past the initial startup phase. After one year in operation, new businesses have a 77% success rate but by 10 years that number drops to 34.7%.
Here's how it breaks out over 20 years:
| Years in business | Share still operating |
|---|---|
| 1 year | 77.9% |
| 2 years | 65.9% |
| 5 years | 51.4% |
| 10 years | 34.7% |
| 15 years | 25.5% |
| 20 years | 19.5% |
Source: Bureau of Labor Statistics
What Small Business Owners Earn
The majority of U.S. businesses (82%) operate with no staff. They may hire some contractors, or be owned by a sole proprietor but they have no employees.
Non-employer firms bring in $57,611 in average annual revenue, according to the U.S. Census Bureau Data.
How much an entrepreneur pockets depends on the type of small business they're operating. The first question I ask is if their business is an S Corporation or a sole proprietorship because this affects how your revenue translates into net profit.
For a sole proprietor, net income is the amount remaining after you pay your expenses. If the average net profit margin for your business is 40%, that doesn't mean you're taking home $0.40 for each dollar as profit. Rather, it represents both your pay and the money you have to reinvest into your business.
At an S Corporation, the owner receives a W-2 salary that's deducted from their net income, so it often reads lower than a sole proprietor in the same industry.
How Small Business Owners Finance Their Businesses
Most entrepreneurs start a business using their personal savings. But once they have a few months of operating experience under their belt, some decide to expand with small business loans.
Here's the type of financing small business owners apply for within Clarify Capital's lender network.
Short-term business loans
A lump sum from $10,000 to $5 million repaid on a fixed schedule. Repayment terms run from 6 to 36 months with APRs starting at 6%. Typically used for a single, large purchase.
Business lines of credit
A revolving credit line up to $5 million that covers the day-to-day costs of running a business. You only pay interest on what you draw. APRs start at 6%.
Equipment financing
Covers up to 100% of the value of specialized tools and vehicles for your business. Repayment terms run from 12 to 72 months and the equipment serves as the collateral.
Invoice factoring
Advances up to 100% of the value of an unpaid invoice for a fee of 0.5% to 5% per invoice per month. Tied to when the invoiced customer pays, typically 30, 60, or 90 days.
SBA loans
These loans are backed by the U.S. Small Business Administration (SBA) and run up to $5 million. Terms span 10 to 25 years with rates starting at 6.75%. Financing can land as fast as two weeks but typically takes 30 to 90 days.
Home equity lines of credit (HELOC)
A revolving credit line secured by the value of your home. Lines run up to $750,000 with a draw period of five years. Your home secures the line, so it's at risk if you default.
Minimum Qualifications
For Financing Through Clarify Capital
$10,000 in monthly revenue
Your business must earn at least $10K per month in a business bank account.
500+ credit score
You can get approved with any credit score. But the better your credit rating, the better interest rates lenders offer. Your FICO score should be above 500.
Minimum six months in business
Your company should be operational for a minimum of six months. This shows business lenders that your company is sustainable and won't go out of business.
Have a business bank account
Your Clarify advisor will need three or four months of your most recent bank statements to verify income. This is just to see you're actually making $10K+ month in revenue.
What Small Business Owners Struggle With
Small business owners are facing a number of new obstacles, from the rise of emerging technologies like artificial intelligence to volatile economic activity.
Here are a few common challenges that resonate with the entrepreneurs I know:
Combatting rising costs. Forty-five percent of small businesses cited an increase in the cost of materials or services due to inflation as a major financial concern.
Developing targeted marketing strategies. Finding ways to reach customers is a common issue for small business owners. This is especially true for independent businesses that don't have the marketing support of a franchise behind them.
Hiring qualified employees. Retaining them is also a challenge. Millennials are known as the “job-hopping generation,” and more than half say they'd be open to a new role if presented with one.
Getting funding through financing. Just 42% of applicants received the amount of financing they applied for. High levels of existing debt are a common reason for denials.
Maintaining a steady cash flow. Uneven timing between money coming in and going out is a constant challenge for small business owners. We've written extensively about this problem in our post on managing cash flows for small business owners.
Financing that Fits Small Business Owners
Many small business owners are experiencing rising operating costs that put pressure on their cash flow, forcing them to dip into personal savings to keep the lights on. If this sounds like you, financing could be a promising alternative.
Clarify Capital matches you across our network of 75+ vetted, reputable lenders. Apply today to see what you qualify for. Checking your options won't affect your credit score.
Step 1:Apply online
It takes about two minutes. You'll need your business's legal name, EIN, time in business, monthly revenue, requested loan amount, owner contact information, and a credit authorization.
Step 2:Connect with a lending advisor
A U.S.-based Clarify Capital lending advisor reviews the application, runs a soft credit pull (no impact to your score), and requests 3 to 4 months of recent business bank statements.
Step 3:Get matched and funded
Clarify Capital works with 75+ vetted lenders and matches your profile with the right financing. Approvals often get a same-day offer (SBA loans can take longer).
Frequently Asked Questions
What Are the Demographics of Small Business Owners?
Most small business owners are over 55 years old. Women-owned businesses make up 40% of U.S. businesses; there are roughly 13 million minority-owned businesses. There are about 1.7 million veteran-owned businesses and nearly 22% of business owners were born outside the United States.
What Is the Number One Reason Small Businesses Fail?
Running out of cash is a common issue, especially over a long period of time. While 77% of businesses survive one year, that decreases to just 19% by the 20-year mark.
How Many Businesses Make Over $500,000 a Year?
Relatively few. The majority of non employer firms bring in an average revenue of $57,611 annually. Higher revenue levels typically concentrate among the businesses with employees.
Who Counts as a Small Business Owner?
The SBA defines a small business as an independently owned business employing fewer than 500 people. This encompasses a wide range of possible businesses including consultants working alone, companies employing hundreds of workers, and firms with just a few employees on staff.
How Are Most Small Businesses Financed?
Most start with personal savings, then lean on small business loans, bank loans, and other types of financing like credit cards.
How Does Clarify Capital Protect My Information?
Clarify Capital follows SOC 2 security principles. You can read more about how we handle your data on our data protection page.
Michael Baynes
Co-founder, Clarify
Michael has over 15 years of experience in the business finance industry working directly with entrepreneurs. He co-founded Clarify Capital with the mission to cut through the noise in the finance industry by providing fast funding and clear answers. He holds dual degrees in Accounting and Finance from the Kelley School of Business at Indiana University. More about the Clarify team →
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