Capital Region Business Formation Increased through Pandemic
Business formation continued in the Capital Region throughout 2020 and despite the pandemic. Last year, 9,456 applications to form a business were filed in the eight-county Capital Region, up by 295 (3.2 percent) from the previous year, according to a Center for Economic Growth (CEG) analysis of new U.S. Census Bureau data.
The region’s business formation growth rate fell below the state average of 10.7 percent, which was driven by a 12 percent surge in applications in the New York City region. These Census Bureau statistics are based on the number of applications to the Internal Revenue Service (IRS) for an Employer Identification Number (EIN) and cover a range of businesses, such as corporations, partnerships, nonprofits and sole proprietorships. Among the Capital Region’s eight counties, business formation growth was strongest in Schenectady and Greene counties at 19.7 percent and 17.9 percent, respectively.
Although businesses were required to have an EIN to apply for Paycheck Protection Act (PPP) funding during the pandemic, research from the University of Maryland and the National Bureau of Economic Research suggests this stimulus funding did not drive the 2020 business formation activity. One reason for that is because to be eligible for PPP funds, a business had to have an EIN by February 2020.
Not all businesses with an EIN are employers. However, in 2020, the Capital Region did see an increase in employer establishments even as it saw a sharp decline in employment. The eight counties averaged 28,778 private sector employer establishments in 2020, up 147 firms (0.5 percent) from the previous year. That was the state’s fourth fastest growth rate for private sector employer establishments, trailing the New York City (1.3 percent), Hudson Valley (0.7 percent) and Long Island (0.6 percent) regions, according to preliminary data from the U.S. Bureau of Labor Statistics (BLS). In the Capital Region, private sector employer establishment growth was strongest in Columbia and Greene counties at 1.4 percent and 1.2 percent.
As a regional technology center under the New York Manufacturing Extension Partnership program, CEG’s Business Growth Solutions (BGS) unit offers a menu of support services for entrepreneurs. These include improving access to facilities, prototyping support with 3D printer services, and identifying potential investors, mentors, and resources. BGS also provides opportunities for startups to showcase business ideas through programs such as VentureB and the New York State High School Business Model Competition. CEG is also an affiliate of the Capital Region Chamber, which provides support services for entrepreneurs include, loan programs, entrepreneur boot camps and an MWBE program.
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