the best and worst U.S. cities to start a small business

If you’re looking to launch a new start-up, you might find an ideal home in North Carolina.

That’s according to online lending marketplace Lending Tree, which recently published a study on which U.S. cities currently offer the best range of conditions for entrepreneurs looking to start a new business. At the top of the list: Raleigh, North Carolina, a capital city with low unemployment and a well-educated population of workers.

In fact, multiple cities in North Carolina ranked high on Lending Tree’s rankings, prompting the report to name the Tar Heel State the country’s best place to start a new business. Charlotte and Durham ranked third and fourth, respectively. And Greensboro and Winston-Salem came in 39th and 48th.

One reason for North Carolina’s strong representation: The state offers among the country’s lowest corporate tax rates. It also has the country’s lowest maximum corporate tax rate, at 2.5%, helping it land the No. 2 spot on CNBC’s 2021 ranking of the best U.S. states for businesses.

The Lending Tree study scored the 100 largest U.S. metro areas by population, based on factors like the proportion of residents who hold a bachelor’s degree, state corporate tax rates and local housing costs. The study drew from U.S. Census Bureau data and analysis from entrepreneurship nonprofit Ewing Marion Kauffman Foundation.

Raleigh shot to the top of the rankings thanks to its relatively low unemployment rate, which was 3.9% in July. That’s well below the national rate, which was 5.4% at that time and has since fallen to 4.8%

More than half of the city’s population, which stands at 468,000 people according to the Census Bureau, is between ages 24 and 55. And 48% of the city’s residents hold at least a bachelor’s degree, which is the seventh-highest proportion on Lending Tree’s ranking of cities. The average across all 100 metro areas is 34.5%. 

Meanwhile, Austin, Texas, ranked just behind Raleigh to nab the No. 2 spot on Lending Tree’s list. Austin received high marks for its strong business survival rate, with 80% of new businesses lasting past their first year, ahead of the 78% national rate.

Businesses in Texas’ capital city also benefit from the state’s friendly corporate tax laws, which tend to attract start-ups and large corporations alike. Several high-profile companies have announced plans to move to the Lone Star State in the past year, including Tesla and Hewlett-Packard.

Lending Tree’s rankings also highlight some of the worst U.S. metro areas for starting a new business. Three California cities occupy the list’s final three spots: Fresno, Stockton and Bakersfield ranked 98th through 100th, respectively.

Each of those three cities suffers from high unemployment rates compared to the national average. Bakersfield’s is the highest of all the 100 top U.S. metro areas, at 10.7% as of July 2021.

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