Small Business Profile: PENNSYLVANIA 

Small businesses are the heart of Pennsylvania’s economy. Research by the Office of Advocacy shows that small businesses create most of the nation’s net new jobs, and they bring dynamic ideas, innovative services, and new products to the marketplace. They account for almost all of the nation’s employer firms and generate half of non-farm private output. New business creation is key to a state’s ability to increase its gross state product, state personal income, and total state employment. This small business profile uses the most recent data available to demonstrate the valuable contributions that small businesses make to Pennsylvania’s economic health.

Number of Businesses.  Pennsylvania had an estimated total of 1,006,900 small businesses. Employer firms totaled 284,800 in 2006, up 1.6 percent from the previous year. Of this total, an estimated 98.4 percent, or 280,200 were small. Self-employment (incorporated and unincorporated) totaled 549,600 in 2006, a decrease from 552,200 in 2005. Non-employer firms totaled 731,000 in 2005, an increase of 3.3 percent since 2004. (Sources: U.S. Dept. of Labor, Employment and Training Administration; U.S. Dept. of Commerce, Census Bureau; U.S. Dept. of Labor, Bureau of Labor Statistics.)

Women-owned Firms. In 2002, businesses owned by women numbered 227,100, represented 26.0 percent of the state’s 874,300 businesses, and generated $39.0 billion in revenues. Employer firms owned by women totaled 34,600, an increase of 8.4 percent since 1997. Women numbered 148,000 or 26.9 percent of the state’s self-employed persons in 2006, a decrease of 8.9 percent from the previous year. (Sources: U.S. Dept. of Labor, Bureau of Labor Statistics; U.S. Dept. of Commerce, Census Bureau.)

Minority-owned Firms. In 2002, Asian-owned firms totaled 22,600, and 7,200 of them were employer firms; Black-owned firms numbered 24,800, and 2,700 were employer firms; Hispanic-owned firms totaled 11,000, and 1,600 were employer firms.  Native Hawaiian and other Pacific Islander-owned businesses totaled 290. Employer firm data for this group are unavailable. Data on the number of American Indian and Alaska Native-owned businesses are also unavailable. (Source: U.S. Dept. of Commerce, Census Bureau.)

Business Turnover. An estimated 34,928 new employer firms were created in 2006, which is 4.6 percent less than the number created in 2005. Business bankruptcies totaled 742 in 2006, down from 1,356 the previous year, while business terminations decreased from 37,000 in 2005 to 35,800 in 2006. (Sources: U.S. Dept. of Labor, Employment and Training Administration; Administrative Office of the U.S. Courts; U.S. Dept. of Commerce, Census Bureau.)

Employment. Small firms employed 50.3 percent of the state’s non-farm private labor force in 2004, which was below the national average of 50.9 percent. These 237,400 firms accounted for 98.4 percent of the state’s employer businesses, and they employed 2.6 million people (Table 1). Small businesses added a total of 77,800 net new jobs between 2003 and 2004 (Table 2). (Source: U.S. Dept. of Commerce, Census Bureau, Statistics of U.S. Businesses.)

Small Business Income. Non-farm proprietors’ income, which is a share of small business income, increased by 4.7 percent, from $38.1 billion in 2005 to $39.9 billion in 2006. (Source: U.S. Dept. of Commerce.)

Finance. Commercial banks and savings institutions continued to be important sources of small business financing. The number of lending institution branches in the state increased in 2006 (Table 3). For a list of financial institutions in the state that make the most loans to small businesses, visit www.sba.gov/advo/research/lending.html.

To learn more about the Office of Advocacy’s data and analyses of small business, visit www.sba.gov/advo/research, call (202) 205-6533, or email advocacy@sba.gov.

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