Data shows 2020 record year for new businesses in NC and US

While 2020 brought the worst national unemployment numbers in nearly a century, it was also a record-breaking year for the creation of new businesses--both in North Carolina and across the country.

Video Transcript

ED CRUMP: While those of us who were able to work from home during the pandemic were grateful to have our jobs when so many others were losing theirs, there were others who actually quit good jobs to start a business during the pandemic.

TORREY DEBNAM: When there is an opportunity, you have to answer the call. I feel confident in my decision.

ED CRUMP: Torrey Debnam is one of a record number of North Carolinians who started a new business in the midst of a pandemic. He left a good job to start The Pairing Place, a gift basket company that helped other businesses stay afloat by selling their items online.

One of the first things new businesses do is get an employer identification number or EIN. Data analyzed by ABC 11 shows that more than 133,000 EINs were issued in our state in 2020. That's a 29% increase over the prior year and an all-time record.

GREGORY BROWN: It's been a huge spike in the number of new businesses formed over the last year. And it seems to be directly related to COVID.

ED CRUMP: UNC finance professor Gregory Brown and others in the business world know the phenomenon as the great reset. It's when bad economic times spur entrepreneurial innovation, including the creation of new businesses. And the pandemic's great reset didn't just happen here. ABC 11 data analysis shows more than 4,350,000 employer identification numbers were issued nationwide. That's a 24% increase over the prior year and another all-time record.

GREGORY BROWN: But to see it now is exciting. It does mean that there is this kind of creative, innovative process happening with small businesses.

ED CRUMP: And Torrey Debnam's business is proof that the record number of new businesses could be even larger than the EINs show. Several years ago Debnam got an EIN when he toyed with starting another business. And when he tried to get a new EIN for The Pairing Place he was told to use his old one.

TORREY DEBNAM: I can assure you that those numbers are skewed a little bit in regards to new business startups.

GREGORY BROWN: It could be that there's more businesses out there that are operating now than you would see from just looking at the EIN data.

ED CRUMP: Brown says the bad news is there's probably still a net loss of business due to the pandemic. But the record number of startups gives hope that America's economy could soon be back on track.

Ed Crump, ABC 11 Eyewitness News.