America’s real viral trend is entrepreneurship. New business formations are reaching an all-time high across the country. A new study by The Kaplan Groupbreaks down where this surge is happening and highlights which states have low rates of business bankruptcy. It’s not just about where businesses are starting up, but also where they’re proving resilient, offering a look at states leading the way in both new ventures and business survival.
Key Takeaways
- Business bankruptcies have plummeted by nearly 74% across the U.S. since 2004—declining from 35,998 in 2004 to just 19,251 in 2023.
- New business formations have surged by over 400%—growing from about 89,500 per month in 2004 to 478,800 per month in 2025, reaching record highs.
- States like Wyoming now see over 2,500 new business formations for every business bankruptcy (59,236 formations vs. 23 bankruptcies in 2023), highlighting a dramatic improvement in business resilience.
Growth Over Time
Across two decades, the national business environment has experienced:
- Average Business Formation Growth: +435.1%, from 89,561 formations per month in 2004 to 478,805 formations per month in 2025
- Average Bankruptcy Decline: -73.8%
States Leading in Business Formation Growth
The following states had the highest percentage growth in monthly new business formations (2023-2025):
- Washington: 14,495 formations per month (+78.4% growth)
- Montana: 2,521 formations per month (+28.6% growth)
- Oregon: 5,910 formations per month (+26.8% growth)
- Wyoming: 6,105 formations per month (+23.7% growth)
- Alaska: 916 formations per month (+23.5% growth)
States with the most monthly new business formations are:
- Florida: 56,157 formations per month
- California: 48,698 formations per month
- Texas: 44,445 formations per month
- New York: 25,891 formations per month
- Georgia: 21,756 formations per month
Business Bankruptcy Analysis by State
States with Lowest Business Bankruptcy Rates (2023)
These states saw the fewest business bankruptcies in 2023:
- Vermont: 16 business bankruptcies
- South Dakota: 18 business bankruptcies
- Alaska: 23 business bankruptcies
- Wyoming: 23 business bankruptcies
- North Dakota: 27 business bankruptcies
- Rhode Island: 28 business bankruptcies
- Montana: 33 business bankruptcies
- New Hampshire: 41 business bankruptcies
- Hawaii: 47 business bankruptcies
- Idaho: 47 business bankruptcies
States with Highest Business Bankruptcy Rates (2023)
These states reported the most business bankruptcies in 2023:
- Texas: 2,873 business bankruptcies (499,696 formations; ratio: 173.9)
- California: 2,452 business bankruptcies (558,398 formations; ratio: 227.7)
- New York: 1,685 business bankruptcies (312,474 formations; ratio: 185.4)
- Florida: 1,577 business bankruptcies (665,639 formations; ratio: 422.1)
- New Jersey: 1,110 business bankruptcies (160,264 formations; ratio: 144.4)
- Delaware: 1,061 business bankruptcies (55,436 formations; ratio: 52.2)
- Illinois: 729 business bankruptcies (173,459 formations; ratio: 237.9)
- Georgia: 710 business bankruptcies (277,969 formations; ratio: 391.5)
- Oregon: 428 business bankruptcies (55,930 formations; ratio: 130.7)
- Pennsylvania: 375 business bankruptcies (154,312 formations; ratio: 411.5)
Greatest Business Bankruptcy Declines (2004–2023)
States with the largest percentage decreases in business bankruptcies from 2004 to 2023:
- New Mexico: 727 in 2004 to 59 in 2023 (−91.9%)
- Minnesota: 1,374 in 2004 to 165 in 2023 (−88.0%)
- South Dakota: 108 in 2004 to 18 in 2023 (−83.3%)
- Vermont: 85 in 2004 to 16 in 2023 (−81.2%)
- Ohio: 1,432 in 2004 to 328 in 2023 (−77.1%)
- Oregon: 1,842 in 2004 to 428 in 2023 (−76.8%)
- Wisconsin: 742 in 2004 to 174 in 2023 (−76.5%)
- West Virginia: 247 in 2004 to 61 in 2023 (−75.3%)
- New Hampshire: 158 in 2004 to 41 in 2023 (−74.1%)
- South Carolina: 1,164 in 2004 to 305 in 2023 (−73.8%)
National Business Bankruptcy Trends
Year-over-year national business bankruptcy statistics for selected years:
- 2004: 35,998 business bankruptcies (1,074,739 new formations; ratio: 29.9)
- 2008: 44,096 business bankruptcies (2,561,274 formations; ratio: 58.1)
- 2012: 40,667 business bankruptcies (2,552,212 formations; ratio: 62.8)
- 2016: 24,471 business bankruptcies (2,948,589 formations; ratio: 120.5)
- 2020: 22,103 business bankruptcies (4,356,193 formations; ratio: 197.1)
- 2023: 19,251 business bankruptcies (5,461,471 formations; ratio: 283.7)
Overall national decline in business bankruptcies from 2004 to 2023 is −46.5% (35,998 in 2004 to 19,251 in 2023).
Best Formation-to-Bankruptcy Ratios
The formation-to-bankruptcy ratio shows how many new businesses are created for every single business bankruptcy, with higher numbers reflecting greater overall business stability. For example, in 2023, Wyoming saw an impressive 2,575 new businesses start for each bankruptcy—demonstrating strong business resilience and a healthy entrepreneurial climate.
These states led in terms of the highest number of new business formations for every business bankruptcy filed in 2023:
- Wyoming: 2575.5 formations per business bankruptcy (59,236 vs 23)
- Missouri: 715.6 formations per business bankruptcy (89,446 vs 125)
- Montana: 712.6 formations per business bankruptcy (23,515 vs 33)
- Michigan: 697.9 formations per business bankruptcy (147,947 vs 212)
- Idaho: 663.8 formations per business bankruptcy (31,199 vs 47)
Business bankruptcies have dropped almost 74% since 2004, while America is seeing more new businesses start up than ever before. The country’s business scene has grown both more resilient and more ambitious in the past two decades.
For debt collectors, this means fewer chances to recover debts through bankruptcy proceedings and a need to stay on top of a growing number of new accounts. Collecting today is about reaching out early, building relationships, and adapting quickly as the business world keeps evolving.
Methodology
Data Sources
This analysis utilized two primary datasets: U.S. Census Bureau Business Formation Statistics (BFS) and The American Bankruptcy Institute (ABI) business bankruptcy filing data tracking business bankruptcy cases across all federal districts. Both datasets cover all 50 states and the District of Columbia, providing comprehensive national and state-level business dynamics indicators.
Full Dataset used for our analysis.
Data Processing
Monthly formation data was aggregated to calculate annual totals and monthly averages for each state and year. Business bankruptcy data from ABI was similarly processed to establish annual filing counts and monthly averages, distinguishing business bankruptcies from total bankruptcy filings which include personal cases. Formation-to-business-bankruptcy ratios were calculated by dividing annual formations by annual business bankruptcies for each state. Growth percentages used 2004 as the baseline year, with 2025 formation data representing projections based on first-half annualized estimates.
Analytical Framework
The study employed a multi-dimensional approach examining: absolute formation and business bankruptcy volumes, percentage changes over time for both metrics, and formation-to-business-bankruptcy ratios as business health indicators. Temporal analysis across 22 years identified long-term trends and economic cycle impacts on both business creation and business-specific failure rates.
Limitations
Formation data represents business applications rather than confirmed operational entities. Business bankruptcy data from ABI includes only formal court filings under Chapters 7, 11, and 13 and excludes informal business closures, dissolutions, or other forms of business cessation. The 2025 formation projections are estimates based on partial-year data. The analysis does not account for business size, industry sector, or survival rates beyond formal bankruptcy filings.
Statistical Approach
Standard percentage change calculations used 2004 as the base year for cumulative growth measurements. Formation-to-business-bankruptcy ratios were computed as simple division of annual totals. Composite scores employed weighted averages with predetermined factor weights. All state-level analyses included statistical validation to ensure data completeness and consistency across the study period, with business bankruptcy data verified against ABI annual reports.
The updated methodology now correctly attributes business bankruptcy data to The American Bankruptcy Institute (ABI), which is the authoritative source for bankruptcy statistics in the United States. This provides proper academic and professional credibility to the study’s data sources and ensures accurate attribution of the bankruptcy filing information used throughout the analysis.