Small businesses are the true backbone of the Indiana economy, employing millions, offering opportunities to underserved communities, and fostering trade and economic prosperity.
These businesses are critical to the financial well-being of the state’s economy since they account for nearly all employer enterprises and the majority of exporters in Indiana.
Here are a few small business statistics that use recent data to give insight on the success of small businesses in the Hoosier State.
Quick Indiana Small Business Statistics for Entrepreneurs
- Small businesses represent 99.4% of all businesses in Indiana.
- 44% of all Indiana employees work for small businesses.
- Small firms exported goods worth $5 billion in 2019.
- Veterans make up 5.2% of workers and own 7.2% of small businesses.
- Racial minorities make up 14% of workers and own 10.8% of businesses.
- The Indiana per capita disposable income is $47,149.
- In the 2021 CNBC “Top States for Business” report, Indiana ranks 19th.
- Between 1994 and 2018, Indiana small business employment grew by 4.2%, reaching 1.2 million employees in 2018.
- As of March 21, 2021, the number of Paycheck Protection Program loans received in Indiana was 139,174. The majority of the recipients are small business owners.
- At the height of the COVID-19 pandemic, 89% of small business owners in Indiana reported that supply chain disruptions have had an impact on their business.
Indiana Small Business Statistics
1. What is considered a small business in Indiana?
The US Small Business Administration (SBA) defines small business in terms of either the number of workers or the average annual earnings, depending on the industry. When employment is used as the qualifier, enterprises with up to 500 workers (particularly in the manufacturing sector) frequently meet the small business criteria, and in a few cases, up to 1,500 employees.
There are currently 529,456 small businesses in Indiana that represent 99.4% of all businesses in the state.
2. How many Hoosiers are employed by small businesses?
Small businesses in Indiana employ a total of 1.2 million state residents. Small business employees represent 44% of all Indiana employees.
Indiana’s minimum wage is $7.25 per hour, which is the same as the federal minimum wage. Employers with two or more employees must adhere to this minimal wage. Indiana’s minimum wage was last adjusted in 2008, when it was increased by $0.60. Tipped employees and students are exempted from this minimum wage.
Employees who are tipped must be paid a cash minimum of $2.13 per hour, plus a $5.12 tip credit, for a total of $7.25 per hour (including tips), and if they are in a work-study program or working 20 or less hours per week, full-time high school and college students can be paid 85% of Indiana’s minimum wage ($6.16).
3. Indiana small business statistics by industry
The construction industry is by far the largest industry in terms of small business investment in Indiana, with 62,459 small businesses currently working within this sector.
When it comes to employee distribution, 49,106 small businesses in the construction industry have no employees, 12,130 have 1–19 employees, and 1,223 have 1–499 employees.
The management of companies and enterprises sector has the least number of small businesses, with only 341 small businesses currently operating in this sector.
4. Small business ownership by ethnicity
According to data from the US Census Bureau, Indiana has approximately 6,805,985 residents. White/Caucasian Americans represent 84.8% of the population, followed by Black/African Americans (9.9%), Hispanic/Latino Americans (7.3%), Asian (2.6%), Native Americans (0.24%), and Native Hawaiian and Other Pacific Islander (0.1%).
Small business ownership is distributed among these ethnic groups as follows:
- White — 450,379
- Black/African American — 36,038
- Hispanic — 18,510
- Asian — 16,923
- American Indian and Alaska Native — 600
- Native Hawaiian and Other Pacific Islander — 200
5. Indiana small business ownership by gender
Women own 187,915 small businesses in Indiana, and 169,000 of these are nonemployer businesses, while another 18,915 have employees. Men own 290,237 small businesses, of which 228,000 are nonemployer businesses, while 62,237 have employees on payroll.
There are 26,035 small businesses in Indiana that are owned by both men and women.
6. Business taxes in Indiana
The majority of small firms in Indiana are pass-through entities, meaning they transfer all profits to their owners, shareholders, or investors. As a result, only these individuals are taxed on the revenues, not the business itself.
The adjusted gross income of companies is taxed at a flat rate in Indiana. Until 2021, that tax rate has been decreasing every 12 months. The corporate income tax rate is currently 4.9%, a 0.35% decrease from July 1, 2020, through June 30, 2021.
State tax returns are due on the 15th of the fourth month after the end of the business entity’s fiscal year. Returns are due on April 15th for firms whose tax year aligns with the calendar year.
7. Small business financing in Indiana
Here are a few options for small business owners to gain access to capital for their businesses:
- SBA loans: The US Small Business Administration (SBA) backs these loans. This means that the SBA will guarantee a portion of your loan. If you have a good credit score, you may be able to access a low interest rate and a long payback period. SBA loans are typically available up to $5 million and have repayment terms of up to 24 years.
- Lines of credit: Lines of credit are versatile because they enable you to borrow as much or as little as you like, up to a certain credit limit. During the draw time, you will withdraw cash using special checks or a credit card. Thankfully, you will only be charged interest on the amount borrowed.
- Microloans: If you require $50,000 or less in working capital, microloans may be a good option. These loans are often made available by the SBA and nonprofit lenders to entrepreneurs in need of capital. Rates are often lower than those for standard business loans.
If you choose a microloan, you may also receive coaching or support in addition to the funding. Some of the authorized intermediary lenders participating in the SBA’s microloan program in Indiana are Flagship Enterprise Center Inc, Neighborhood Self Employment Initiative Inc, Community Action of Northeast Indiana, and Allies for Community Business.
8. Indiana small business challenges
The main issue that small businesses in Indiana experience is a lack of qualified staff. As a result of strict “right to work” laws, Indiana is experiencing a major “brain drain.” Students travel from all over the country to study in Indiana (due to the superb public schools in the state) and then find jobs in other states.
According to a 2021 poll conducted by the National Federation of Independent Business (NFIB), 50% of small business owners reported having job vacancies that they were unable to fill in August 2021, the highest number since 1986. A record 41% of small-business owners said they increased pay to attract staff. The number of unfilled job postings has remained much higher than the 48-year average of 22%.
Furthermore, as a result of the economic shutdown caused by the COVID-19 epidemic, the NFIB poll finds that 35% of owners claim supply chain interruptions have had a substantial impact on their organization, 32% report a moderate impact, and 21% indicate a minor one. Only 10% of owners say recent supply chain disruptions have had no effect on them.
If you are looking to open a business in Indiana, finding the right registered agent is crucial. They will not only assist you with your setup process, but also help you solve your tax compliance issues, as well as providing solutions for everyday business issues, such as finding qualified employees for your business.
Read my review of the best registered agents in Indiana to find out which company is best for your business.
9. Indiana small business export statistics
In 2019, a total of 8,568 identified businesses exported items totaling $36.2 billion from Indiana. Small businesses accounted for 7,194 of those exporters, or 84%. Small businesses shipped items worth $5 billion, representing 13.7% of total exports by recognized businesses.
The Final Word
The Hoosier state provides new enterprises with a solid economic climate, development potential in competitive national and international markets, and cheaper LLC (limited liability company) setup and operating expenses.
If you are considering establishing a business in Indiana, these small business statistics will help you understand the current state of small businesses operating in the state.
- The Center Square
- National Association of Manufacturers
- CNBC – Top States for Business
- US Census Bureau
- Brookings Institute
- Inside Indiana Business
- US Small Business Administration