Biz2Credit CEO Rohit Arora joined Yahoo Finance to break down which cities saw the most small business success in 2020.
ADAM SHAPIRO: Let's get a small business update. And the first small business issue we want to talk about is where's the place in the country for a small business to operate. That changes from time to time. To give us some insight into that, we invite into the stream the CEO from Biz2Credit, Rohit Arora. Good to have you here, Rohit. And when we talk about small business, we're talking about business with $10 million or less in revenue and fewer than what, 250 employees, right?
ROHIT ARORA: Yeah, yeah, fewer than 250 employees.
ADAM SHAPIRO: OK, so these days, I'm going to give part of the results here. I was surprised that New York in prior years had been number two. New York fell to number seven. But where are the top spots now?
ROHIT ARORA: So I think what last year has really shown, is that things have moved so much more digital. And California has really benefited. So out of the top 10 cities, the five cities are in California. But I think surprisingly, Florida has made the biggest progress in this whole COVID crisis. More people are moving there, more businesses are moving there. And what we are starting to see, is that it's becoming sort of a digital and a tech hub.
And that's starting to reflect, because this is the first time when Florida has ranked so highly, and also the number of cities in Florida. So I think California obviously is still dominant because of their prowess in the technology and digital services business. Florida is number two, followed by Boston. Obviously, Massachusetts has big educational hub. And then New York has actually fallen quite significantly to seventh place now.
SEANA SMITH: Do you think the jump that we saw in Florida with Miami and Fort Lauderdale now at the number two spot, do you think that's going to be here to stay? Or is this something that we're simply just seeing because of the COVID restrictions over the last year?
ROHIT ARORA: So I think right now, a lot of that stuff is still I would say, it's not like I would say not really permanent kind of stuff. But having said that, I think more and more people are starting to take a call and a decision. And even in our own hiring, we are seeing that more and more of our new employees who are joining us are asking us that question, that can we work remote, or can we work from Florida. So that's starting to happen. And I'm not seeing that happening earlier ever, where we have been in this business for the last 12, 13 years.
And I think the other big thing is that as more people move in a place, it just attracts other people. So I think that critical mass is starting to build up. And I think the biggest thing is that companies have become a lot more comfortable for people to work remote now. And that is actually is a huge game changer, which post COVID, I don't see that going full 100% back to the office. And in my view, Florida is playing cards really well right now. New York people are concerned overall, not just with the taxes, but the overall environment right now also. So I think California is still going very strong. And I foresee Florida to get even stronger than where it is right now.
ADAM SHAPIRO: But then you get, for instance, the top 10 cities with the youngest businesses. Indianapolis, Indiana number one, tied actually with Phoenix. But Circle Center, Circle City, Indianapolis. Why Indy?
ROHIT ARORA: So Indy is actually very interesting. Over the last few years, the cost of living, the cost of doing business is a lot less, and we have seen that Indianapolis rankings have gone up in the last few years. And I think what COVID has really done, is that it just let people to just go away and work remote. And a lot of people who are from the Midwest and used to be working in bigger cities have gone back and started working from there. Companies have started to think about relocating or more small businesses are starting in those parts of the country that were traditionally not happening.
And I think the overall, the digitization of every small business is gathering pace at a very rapid pace. And that means that you can work from a smaller place. And also from places which have good educational institutions good hub of talent. And what they really lacked earlier was a critical mass or they didn't have the right environment for people to stick around.
I think this time that has changed because of COVID, because bigger cities, especially in New York last year with what happened during the COVID crisis, I think a lot of people who just went away have never come back. And New York was becoming a very strong technology hub for the country. And that is starting to fragment, as we see. And that fragmentation on the East Coast is actually moving more towards some of the cheaper places or some of the places like Florida where people just want to live and have a better life, better weather.
And also, they can work from there more closely even with Latin America or Central America. Because the digitization aspect, what we have to realize, that it's going to get even faster in the emerging markets. And wherever you have hubs in US which are dealing with the emerging markets, it's going to get even strengthened. So California is one hub and then Florida is another hub for that. So I think that's it. That's also very, very interesting trend that's starting to happen that it's not just local, but also the international digitization of businesses that's getting, driving a lot of small businesses now.
SEANA SMITH: And you're in touch with small business owners all the time. When you talk about their outlook right now compared to how it was even just a few months ago, how significantly has it improved?
ROHIT ARORA: So obviously, in our study, we have shown that these small businesses' revenues has dropped by 11%, which is the most significant drop in the revenue that we have seen over the last year. And this is more significant than even the 2008 recession. So obviously, it's been a very brutal and tough year. Having said that, the government aid in terms of PPP loans and the EIDL has been extremely helpful. This help came in a very timely fashion, unlike last Great Recession. This has helped a lot of small businesses to survive.
They're more optimistic than they were even three months back. I think vaccination and lowering of the infection rate is really helping them. They are hoping that with the pent up demand coming in, they will be able to come back into business strongly. What they are really worried about is increasing labor cost, decrease in the labor availability, especially with the retail businesses.
And also, how much change they will have to do to their current business models in order to survive and thrive. So those are the three things that is keeping them pretty worried, while at the same point of time, I think overall from a financial aspect, most of the revenue they lost, they have actually got back in the government aid.
SEANA SMITH: Rohit Arora, great to speak with you. CEO of Biz2Credit.