North Carolina business

Esperanza Carrillo, of Burlington, N.C., washes cars at Vivas Hand Car Wash on Wednesday, March 11, 2020.

(The Center Square) – North Carolina has seen about a 94% increase in entrepreneurship over the past year, U.S. Census Bureau of Statistics data shows.

Despite government shutdowns and restrictions in response to the COVID-19 pandemic, North Carolinians submitted 93.8% more new business license applications in January 2021 than January 2020.

The rate is a stark contrast compared with January 2019 to January 2020, when new applications increased by 0.4%.

Gregg Thompson, North Carolina state director for the National Federation of Independent Business, said the increase in business license applications is surprising and most likely is because of North Carolina's flexible business climate and the gap left in services from business closures.

"Sometimes when there's an economic downturn, as we have experienced over the past year or a little bit longer, it does present opportunities for people who were maybe in the process of opening a business or thinking about opening a business to go ahead and do it because there are so many, as we know that have closed," Thompson said.

The South was the region with the highest growth rate in business license applications at 84%, with more than 220,000 new business applications in the region in January, census data shows. North Carolina received 16,171 new applications in January compared with 8,361 applications in January 2020.

The state also saw a 64% increase in applications in February compared with the same time last year. About 13,702 North Carolinians applied for business licenses in February. The South also was ahead of other regions, with a 52% increase in applications over February 2020.

Small businesses employ more workers than larger companies in North Carolina, Thompson said, and many of them have stepped in as bigger companies have reduced hours or closed.

According to a National Restaurant Association survey from December, the food and service industry has been hit the hardest during the pandemic. Since March 2020, 17% of restaurants nationwide had closed either permanently or long-term, the association said. About 10,000 restaurants closed in October through December, the majority of which had been in business for an average of 16 years, the association reported in December.

Most of the 488,519 business applications received nationwide in January were for retail services, census data shows. The industry accounts for 1.6 million jobs in North Carolina and contributes $41.8 billion directly to its gross domestic product, the National Retail Federation said.

Thompson said many of the new business applicants may have moved to North Carolina from other states.

North Carolina had the sixth-highest percentage of inbound migration (60%) in 2020, according to the 2020 National Movers Study released in January. The state's business tax climate may have been a contributing factor to its inbound migration, according to the Tax Foundation, which ranked North Carolina 10th out of 50 states for its overall business tax climate in its 2021 State Business Tax Climate Index.

The year-over-year business license application rate did decrease in North Carolina in March 2020, when the pandemic first hit, followed by a slight decrease in April. The rate increased by 34% in June and skyrocketed in July and August by 75% and 73%, respectively. Thompson believes federal aid such as the Paycheck Protection Program may have increased optimism among small business owners.

Brooke Medina, spokesperson for the conservative think tank Civitas Institute, said the pandemic has created new demands and opportunities in the marketplace.

"As new necessities have become apparent, from masks to ventilators to increased streaming options, American enterprise has risen to the task, reminding us that human capital is the most reliable supply chain we can have and serving as proof that we are willing to creatively destroy–in order to rebuild better–when needed," Medina said.

Mississippi had the highest business license application increase at 164%, with 6,564 new applications in January. Alaska had the lowest increase at 13.2%, with 720 new applications in January.

Staff Reporter

Nyamekye Daniel has been a journalist for five years. She was the managing editor for the South Florida Media Network and a staff writer for The Miami Times. Daniel's work has also appeared in the Sun-Sentinel, Miami Herald and The New York Times.