Arkansas Small Business Statistics (2022)

The Arkansas economy is built on small businesses. Especially compared to the state’s low population, the number of small businesses operating in the state is considerable and growing every year.

Arkansas’ support for small companies has grown evident in recent years, as seen by the state’s pro-business stance, which has enabled thousands of small businesses to prosper in the present climate. This is because there are so many small business resources available, such as development centers, investors, and support networks.

Here are a few small business statistics that show the impact of small businesses on the economy of Arkansas.

Quick Arkansas Small Business Statistics for Entrepreneurs

  • There are 258,552 small businesses in Arkansas.
  • Small businesses employ 47.1% of all Arkansas employees.
  • 47.3% of small business employees in Arkansas are women.
  • 9.3% of small businesses are owned by veterans.
  • Racial minorities make up 26.9% of small business employees.
  • Between March 2019 and March 2020, small businesses contributed a net increase of 2,276 jobs, or 73.4% of the total 3,100 jobs added during this period.
  • There are 1,780 small business exporters in Arkansas.
  • Arkansas accounts for 0.8% of all small businesses in the United States.
  • Every limited liability company (LLC) in Arkansas is required to file an annual report and pay a flat-rate tax of $150 each year. The $150 fee and the annual report are referred to together as the Annual LLC Franchise Tax Report.
  • The day after Black Friday is known as Small Business Saturday. It is a day to honor and promote small businesses and what they do for communities in Arkansas.

Arkansas Small Business Statistics

1. What is considered a small business in Arkansas?

The answer varies by sector, but according to the Small Business Administration (SBA), a small business can be described generally as a business with less than 1,500 workers and a maximum annual revenue of $38.5 million. 

There are currently 258,552 small businesses in Arkansas, representing 99.3% of all Arkansas businesses.

2. How many people are employed by small businesses in Arkansas?

Today, there are 491,383 Arkansans on small business payrolls. They represent 47.1% of all Arkansas employees. The minimum wage in the state is $11.

Notably, 2022 marks the first time in four years that Arkansans earning a minimum wage won’t receive a pay raise. In 2018, Arkansans voted on a staggered rise in the minimum wage. It was approved with 68% of the vote. On January 1, 2019, the state’s minimum wage increased from $8.50 to $9.25 per hour.

On January 1, 2020, it rose to $10 per hour, and on January 1, 2021, to $11 an hour. But that’s where it stops, with no minimum wage hike slated for 2022 or in coming years.

3. Arkansas small business statistics by industry

The construction industry is by far the largest in the state with a total of 35,303 small businesses operating in it. It is followed by the administrative, support, and waste management industries (26,428), and retail trade (25,735).

On the other hand, the management of companies and enterprises sector comprises the lowest number of small businesses with only 175 firms.

4. Arkansas small business ownership by ethnicity

The population of Arkansas is 3,033,946. The predominant ethnicity is White/Caucasian, accounting for 76.72% of the overall population. Black/African Americans make up 15.32% of the overall population. Asians make up 1.2% of the population, and Hispanics 6.4%, while American Indians and Alaska Natives make up 0.8%.

Small business ownership is distributed among ethnicity as follows:

  • White/Caucasian — 214,965
  • Black or African American — 23,141
  • Hispanic — 11,237
  • Asian — 4,300
  • American Indian and Alaska Native — 938
  • Native Hawaiian or Pacific Islander — 250

5. Arkansas small business ownership by gender

There are 91,168 small businesses owned by women in Arkansas. Of those, 83,000 are non-employee businesses while 8,168 have employees. Men own 139,877 small businesses of which 113,000 are non-employee businesses, while 26,877 are employee businesses.

6. How COVID-19 has affected small businesses in Arkansas

Businesses in Arkansas were highly affected by the COVID-19 pandemic, having to adjust to unusual circumstances that disrupted the core operations of numerous sectors. Small businesses, in particular, have been battered by the pandemic.

With decreasing foot traffic, many small businesses were forced to shift to online sales or develop other innovative strategies. Even with these safeguards, small businesses across Arkansas have been feeling the pinch. Most have been forced to downsize their workforce, which in turn has led to a high unemployment rate. In 2020, Arkansas’ unemployment rate climbed to 6.1%, compared to 3.5% the previous year.

However, due to funding provided by the federal CARES Act in 2021 (administered by the Arkansas Economic Development Commission), small businesses have been able to mitigate the impact of the pandemic. By July 2021, the state’s unemployment rate had fallen to 4.4%, compared to 5.8% at the national level.

7. Arkansas small business financing

Through the Arkansas Development Finance Authority (ADFA), a public body set up in 1985 to promote economic growth in the state of Arkansas, aspiring entrepreneurs have access to a source of capital for their businesses.

The ADFA Small Business Guaranty Program offers lenders a loan guarantee of up to 80% on the first $200,000 loan amount, with a maximum loan guarantee of $160,000. Lenders then give funds to small businesses in the form of loans in order to effectively support their working capital needs.

This means that entrepreneurs can obtain funding for the labor and materials required to accomplish business goals.

8. Small business export statistics

According to the profile of US Importing and Exporting Companies released in 2019, a total of 2,254 recognized businesses exported items totaling $5.8 billion from Arkansas. Of these, 1,721 (or 76.4%) were small businesses. 

Small businesses shipped items totaling $1.1 billion, accounting for 18.7% of all recognized business exports in Arkansas.

9. Arkansas small business challenges

The biggest challenge facing small businesses in Arkansas is access to capital, especially among minority communities and women. 

According to research conducted by the Winthrop Rockefeller Foundation and Winrock International, the majority of business grants are made to white- and men-owned businesses, with white business owners receiving roughly 77% of the loans. Only 8% of the grants were provided to firms run mostly by women.

This research (conducted in 2017), found that of the $658.8 million released by the Arkansas Small Business Administration, white entrepreneurs received at least $505 million (76.6%), while Asian and Pacific Islander business owners received $122 million (18.6%). Native Americans received $11.2 million (1.7%), Hispanics received $10.3 million (1.6%), and Black-owned businesses received $9.9 million (1.5%).

A thriving small business environment is dependent on entrepreneurs’ capacity to acquire financing to start their firm, maintain operations, and grow. Unfortunately, these data show that when compared to others with comparable business performance and credit risk, an entrepreneur’s color and ethnicity might influence their access to finance.

Below are a few other challenges that plague small businesses in the state:

  • Hiring talented people
  • Financial planning
  • Tax compliance
  • Finding customers
  • Cash flow issues

Small business owners can solve some of these issues, such as tax compliance, staff hiring, and financial planning, simply by hiring a registered agent in the state of Arkansas. A good registered agent can handle tax reporting on behalf of your business, help you find qualified staff, and keep your business in compliance with the Arkansas Secretary of State.

You can read my review of the best registered agents in Arkansas to find out which company fits your business’s needs.

The Final Word

Venturing into the Arkansas business scene can be a confusing affair, especially if entrepreneurs have no clue about the business landscape in the state. These small business statistics should assist aspiring business owners in understanding what it takes to make a business run properly in the Natural State.


Small Business Statistics By State


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