PROVIDENCE – New businesses in Rhode Island face the second-highest closure rate in the U.S., according to a new report, though they fare near average in longer-term survival.
Private sector businesses in the Ocean State experienced a 27.2% closure rate in their first year, according to an annual business survival report by online marketplace LendingTree, compared to the national average of 20.8% – an increase from the previous year’s report, when 18.4% of businesses throuhgout the U.S. closed in their first year.
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Rhode Island tied with Missouri for second. Washington, D.C., led the nation in first-year business closure rates, at 28%.
Ocean State business survival also fared poorly at the five-year mark, ranking fifth-worst with a 53.6% business failure rate.
Rhode Island was 21st in the country for its 10-year business failure rate, according to the report.
Nationally, 48.4% of private sector businesses close within five years, according to LendingTree, while 65.1% close by 10 years. The report highlights soaring inflation, supply chain issues, difficulty accessing capital and some businesses opening just before the COVID-19 pandemic as key factors behind many of these business closings.
California had the lowest first-year business failure rate in the U.S., at 13.2%.
The report draws from March 2012-March 2022 U.S. Bureau of Labor Statistics data.
R.I. Secretary of State Gregg M. Amore’s office did not return a request for comment on Wednesday. The Rhode Island Small Business Development Center declined comment.
Neighboring Massachusetts had one of the lowest incidences of new business failures, with LendingTree ranking the Bay State 48th in first-year business closure rates, at 19%. This ranking climbed slightly in its 5-year and 10-year business failure rates, at 46th and 44th, respectively.
That translates to 19% of Massachusetts businesses failing within one year of launching, while 45% lasted five years and 61.7% hit the 10-year mark.
Connecticut had the 16th-highest one-year failure rate for new businesses, at 23.1%, and ranked 11th in 5-year and 10-year failure rates.
Jacquelyn Voghel is a PBN staff writer. You may reach her at Voghel@PBN.com.
