New Business Applications during the COVID-19 Pandemic

Abstract: In this paper, we examine trends in new business applications over the last two decades using seasonally adjusted data from the U.S. Census Bureau’s Business Formation Statistics database. We apply a model that predicts the expected number of business applications for each month in 2020 based on historical data and compares these predictions to the actual number of applications filed in 2020. The results of this analysis indicate that the number of business applications filed in 2020 differed from the values predicted by the model to a statistically significant degree for the period between March and April 2020 and the period between June and December 2020.

Keywords: entrepreneurship, startups, new business applications, predictions, COVID-19

Acknowledgements: Alyse Freilich, Thom Goff, Travis Howe, Jessica Looze, and Erin Kenney.

Highlights:

Between February and April 2020, the number of business applications fell by 21.9%.
Business applications increased 135% from April to July, and dropped by 37.2% from July to December 2020.
Overall, applications were up 15.6% in December 2020, compared to where they were in February of that year.
The number of business applications filed each month in 2020 differed from the values predicted by the model to a statistically significant degree for the period between March and April 2020 and the period between June and December 2020.
The number of monthly new business applications continued to fluctuate throughout 2021.

Research Working Papers have not necessarily been peer-reviewed and are made available by the Ewing Marion Kauffman Foundation to share research and encourage discussion. The views and findings expressed herein are those of the authors and do not reflect the official views of the Kauffman Foundation.