Thinking of starting a business? New report reveals the best locations for startups in 2025  

Thinking of starting a business? New report reveals the best locations for startups in 2025  

• A new report from Swoop Funding reveals the top states in America for starting a successful business in 2025.  

• The report analyzes various data factors such as sales tax rates, office rental costs, coworking space availability, and business survival rates to rank all US states based on their suitability for startups.   

• Experts at Swoop Funding offer essential tips for budding entrepreneurs on how to successfully start a business.    

With 670,000 small businesses launched each year*, running a startup remains a dream for many Americans. However, it’s not without challenges as 21% of small businesses fail within their first year, and only 25% last beyond the 15-year mark**.   

A new report by Swoop Funding has revealed the best states in America for launching a successful business.   

Using eleven comprehensive data factors, including Venture Capital (VC) investments, sales tax rates, health insurance costs, and the availability of coworking spaces, each state was awarded a ‘startup score’ out of 100.   

According to the figures, Texas ranks as the best overall location for aspiring entrepreneurs in 2025.  

The Best States for Startups in 2025:  

According to the data, Texas is officially the best state to launch a business in 2025 taking the top spot with a total startup score of 55.31.  

Known for its strong economy and booming business sectors, Texas is home to “Silicon Hills” in Austin and major industries in Dallas, including healthcare and finance.   

The state boasts the highest number of coworking spaces (280) and ranks #1 for business support quality. With $6.66 billion in annual venture capital investment and a 53% business survival rate beyond five years, Texas offers a strong foundation for budding entrepreneurs.  

Following close behind is Ohio who ranks in second place. With the cheapest office rent in the country ($14.82 per square foot) and 55% of businesses surviving past five years, Ohio scores 54.93 in the rankings. Its affordable operational costs and 197 coworking spaces make it an attractive destination for startups.  

North Carolina rounds out the top three, boasting the 7th highest business survival rate and ranking 9th for the number of entrepreneurs by state. With 233 coworking spaces – the 5th highest in the country and more than double the national average, North Carolina achieves a total score of 54.64.   

Top Tips for New Entrepreneurs: Best Practices for Starting Your Business  

Andrea Reynolds, CEO of Swoop Funding, shares her tips for entrepreneurial success.   

“The key to a small business is to outline your goals and be prepared. Once you’ve taken your first steps towards starting your business, an effective plan for your future and the ability to adapt are the differences between a small business that lasts and one that fails shortly into its life.  

“A business grant can be exactly what’s needed to give your startup the platform it needs to grow. There are numerous options to choose from, so research wisely and find the loan that suits your project best.”  

For those ready to maximize their chances for startup success in 2025, here are three key tips from the Swoop experts to help you start off strong:  

1. Choose the Right Business Structure  

Start by carefully selecting the structure of your business, whether it’s a sole proprietorship, partnership, or limited liability company (LLC). This decision will impact everything from taxation to liability down the line.  

It’s crucial to open a separate business bank account to clearly divide personal and business finances.  

2. Take Advantage of Low-Cost Startup Loans  

The Small Business Administration (SBA) offers several government-backed loans, most of which are targeted at established businesses. However, there are options tailored to new businesses such as micro loans up to $50,000 or express loans up to $500,000.   

It’s also not uncommon to take out a personal loan for new business purposes.  

3. Explore all Financial Options  

There are many financial resources available to help you find products tailored to your business needs, including specialized loans for eCommerce, cyber insurance, and commercial mortgages.  
 
If traditional banks decline your application, it doesn’t necessarily reflect the strength of your business plan.  
 
Instead, seeking alternative funding options can provide valuable support for your business by allowing you to compare tailored financial products, such as specialized loans.  

Swoop is committed to helping businesses navigate the funding landscape, ensuring new entrepreneurs find the resources that best meet their needs while guiding them through the various alternatives available.  

For more information on the report, please visit https://swoopfunding.com/us/blog/startup-capitals-of-america  

[ENDS]  

Sources  

https://smallbusiness.chron.com/information-small-business-startups-2491.html*  

https://www.lendingtree.com/business/small/failure-rate/**   

Methodology  

This dataset ranks all 50 US states, based on how good they are for start-up businesses. To do this, 11 different factors were used. Once the data for the factors was collected, the factors were then normalized, to provide each factor with a score between 0 and 1. If data was not available, a score of 0 was given. The normalized values were then summed & multiplied by 9.09, to give each state a total score out of 100. The states were then ranked from highest to lowest, based on their total scores.  

The factors used are as follows:  

• Unemployment rate – The percentage rate of unemployment in each state as of Oct 24, according to the BLS.  

• Cost of living index – An index score ranking the cost of living in each state in comparison to the US average.  

• Sales tax – The combined rate of state & local sales tax rates, using the average local tax rate, according to taxfoundation.org.  

• Income tax-free allowance – The total amount of income tax-free allowance in each state. To calculate this, we assumed the person being single & having no dependents. To allow for better comparisons between states, we converted states which offer a credit deduction to a regular deduction by dividing the credit amount by the lowest marginal tax rate (credit is a discount post-tax, regular is a discount pre-tax), and for states like Delaware, where the first tax bracket starts at $2000 rather than $0, we included this in the tax-free allowance calculation.  

• VC investments – The value of venture capital investments in each state, in 2023, in billions.  

• Business survival rate – The 5-year survival rate of businesses in each state, calculated by comparing the number of businesses started in March 2019, to those still trading in March 2024.  

• Number of entrepreneurs – The number of business registrations submitted in each state in October 2024.  

• Average hourly wage – The average hourly earnings in each state, as of October 2024.  

• Health insurance – The average annual contribution per employee, for employer-based health insurance, in 2023.  

• Average office rent – The average office rent cost in each state, in square feet per annum. To calculate this, we gathered the prices of all listings on the first page of loopnet. In the case of there being less than 10 on the first page their data was further gathered to get a minimum of 10.  

• Coworking spaces – The number of results on Google Maps for the prompt “coworking spaces in X”, where X is the state. Results were filtered to include “coworking” in the business category.  

The factors were indexed as follows:  

• Unemployment rate – Low values get a high score. High values get a low score.  

• Cost of living index – Low values get a high score. High values get a low score.  

• Sales tax – Low values get a high score. High values get a low score.  

• Income tax-free allowance – High values get a high score. Low values get a low score.  

• VC investments – High values get a high score. Low values get a low score.  

• Business survival rate – High values get a high score. Low values get a low score.  

• Number of entrepreneurs – High values get a high score. Low values get a low score.