New Business Applications: 532K (Jan 2026)
532K new business applications were filed in Jan 2026. The post-COVID startup boom refuses to die, but the gap between applications filed and businesses that actually survive past year two is widening fast.
Business Applications (Total) - Historical Chart
Business Applications (Total). Gray shaded areas indicate U.S. recessions.
Source: Federal Reserve Bank of St. Louis (FRED), Series BABATOTALSAUS. Shaded areas = NBER recession dates. Updated 2026-03-09.
America's Startup Boom Is Real. Its Survival Rate Is Not.
The Census Bureau's Business Applications series tracks EIN (Employer Identification Number) applications -- the first step in starting a business. At 532K monthly applications, the U.S. is creating new businesses at a pace roughly 43% above the pre-COVID average of roughly 250K/month. The post-pandemic surge that began in July 2020, when applications spiked to 547K, has proven far more durable than skeptics expected.
But an application is not a business. It is a form. Filing for an EIN takes 15 minutes on the IRS website. You do not need capital, a business plan, or customers. You need a Social Security number and an internet connection. The series counts intention, not execution.
The Census Bureau's own research shows that roughly 25-30% of business applications in the "high-propensity" category (those likely to become employer businesses) actually result in a firm with payroll within 8 quarters. For total applications, which include sole proprietorships, LLCs set up for side hustles, and real estate holding companies, the conversion rate is much lower -- perhaps 10-15%.
What Is Driving the Surge
Several factors explain why applications remain elevated five years after the initial COVID spike:
- Gig economy formalization: Freelancers and independent contractors getting EINs for tax purposes
- E-commerce expansion: Dropshipping, Amazon FBA, Etsy shops, and social media businesses
- Real estate LLCs: Property investors creating entities for each property
- Layoff-driven entrepreneurship: Tech and finance workers starting consultancies after losing corporate jobs
- Immigration-driven formation: New immigrants starting businesses at higher rates than native-born workers
Each of these is real economic activity. But very few produce the kind of employer businesses that create jobs, generate tax revenue, and need bank loans. The headline number conflates a thousand-employee startup with a DoorDash driver getting a tax ID.
The Survival Rate Problem
BLS data shows that roughly 20% of new businesses fail within their first year, 50% within five years, and 65% within ten years. These rates have been remarkably stable over decades. The surge in applications does not appear to be changing them -- if anything, the proliferation of low-capital, low-barrier startups may be pushing failure rates higher for the most recent cohorts, though definitive data will not be available for several more years.
For the credit market, this means a growing pool of young businesses seeking financing, most of which have thin track records and uncertain prospects. SBA lenders, online lenders, and MCA companies are all competing to finance these startups, often with limited underwriting. The combination of record-high applications and unchanged survival rates is a recipe for elevated default rates 2-4 years from now.
The 10-Year Perspective
The 10-year average is 373K monthly applications. Current volume of 532K is above the average by 160K. Year-over-year, applications are up by 36.8%. The reading has been mixed recently, fluctuating without a clear directional trend over the past 6 months.
What This Means for Your Business
If you are a new business in this cohort, recognize that you are competing with more startups than at any point in American history. Differentiation, unit economics, and access to patient capital matter more than ever. If you are an established business watching new competitors enter your market, understand that most will not survive -- but the ones that do will have been battle-tested in the most competitive startup environment ever recorded.
And if you are carrying business debt from a startup launched in 2020-2022 that has not yet achieved profitability, the clock is ticking. The favorable conditions that made starting easy -- stimulus checks, PPP loans, zero-rate environment -- are gone. What remains is the hard work of building a sustainable business, and not every application-turned-company will make it.
New Business Applications - Frequently Asked Questions
The U.S. averages roughly 400,000-450,000 new business applications per month as of recent data (FRED series BABATOTALSAUS). This is significantly above the pre-2020 average of about 280,000-300,000 per month. The current reading is {value} for {period}.
The COVID pandemic triggered a wave of entrepreneurship. Millions of workers lost jobs or left the workforce, and many channeled stimulus payments and savings into new ventures. E-commerce, gig economy platforms, and home-based service businesses drove the bulk of the surge.
No. The Census Bureau estimates that only about 20-25% of business applications lead to a business with payroll employees within eight quarters. Many EIN applications are for sole proprietorships, LLCs used for asset protection, or businesses that never get off the ground.
High-propensity applications are a Census Bureau subset that filters for characteristics most likely to produce an actual employer business: having a planned wages date, a corporate structure, and a non-residential address. This subset is tracked separately as series BAHBATOTALSAUS.
A surge in applications means a growing pipeline of future borrowers. New businesses typically need capital within 6-18 months of formation for equipment, inventory, or working capital. Banks and SBA lenders watch this data to forecast demand for small business loans.
FRED series BABATOTALSAUS, sourced from the Census Bureau's Business Formation Statistics program. The data is derived from IRS EIN applications and is seasonally adjusted. It is published monthly with a roughly one-month reporting lag.
Related Data & Guides
Data sourced from the Federal Reserve Economic Data (FRED) maintained by the Federal Reserve Bank of St. Louis. Updated monthly when new data is released.