National Small Business Day

Small businesses represent 99.9% of all businesses in the United States. That is not a rounding error. Of the 36.2 million businesses operating in America as of 2025, all but a few thousand qualify as small under SBA definitions. Together, they employ 62.3 million people, nearly half the private-sector workforce, and contribute 43.5% of GDP.

National Small Business Day, observed on May 10, was recognized by U.S. Congress in 1980. It grew out of the SBA's National Small Business Week, which has been held annually since 1963. In 2023, a record 5.5 million new businesses were started in the United States.

The federal government's involvement with small business began during the Great Depression. In 1932, President Herbert Hoover established the Reconstruction Finance Corporation to provide emergency lending to struggling banks and businesses. During World War II, the Smaller War Plants Corporation was created in 1942 to ensure small manufacturers received a share of military contracts. After the war, the Small Defense Plants Administration followed in 1951.

These agencies converged when President Dwight Eisenhower signed the Small Business Act on July 30, 1953, creating the Small Business Administration. The law stated the agency's mission: to "aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns." The SBA's 7(a) loan program, still its primary lending vehicle, launched the same year.

From agency to observance

In 1963, the SBA established National Small Business Week, an annual recognition of the sector's contributions. In 1980, the U.S. Congress went further, officially recognizing May 10 as National Small Business Day. The fixed date gave the celebration a permanent anchor alongside the variable dates of the week-long event.

What counts as small

The SBA defines "small" by industry. For most manufacturing sectors, it means fewer than 500 employees. For most service industries, it means annual revenue below specific thresholds. Under these definitions, 99.9% of all American businesses qualify as small. As of 2025, that amounts to 36.2 million firms, 81.9% of which operate with no paid employees at all.

The myth of the 50% failure rate

The widely repeated claim that half of all businesses fail in their first year is wrong. Bureau of Labor Statistics data shows that only 20.4% of businesses fail in their first year. Roughly 50.6% survive five years, and 34.7% survive a decade. The top two reasons for failure are no market need (42%) and running out of cash (38%).

The post-pandemic surge

New business formation accelerated sharply during and after the COVID-19 pandemic. Americans started 5.5 million new businesses in 2023, the highest number ever recorded. In January 2025, the country recorded 21 million cumulative new business applications, also a record. The surge has been driven in part by workers who left traditional employment during the pandemic and by the expansion of e-commerce platforms that lowered the barriers to entry.