Iowa Small Business Statistics: 2026 Data & Trends

Looking to start a small business in Iowa? The Hawkeye State is home to nearly 290,000 small businesses that employ over 637,000 workers. From Des Moines to Cedar Rapids, Iowa small business owners benefit from low operating costs and a pro-business climate. Here's what the 2026 data reveals.

Small Businesses in Iowa: Key Facts

Iowa's small business landscape represents the backbone of the state economy. With nearly 290,000 small businesses operating across all 99 counties, the Hawkeye State ranks consistently strong for entrepreneurship in the Midwest.

• There are 289,962 small businesses in Iowa, accounting for 99.3% of all businesses in the state. SBA 2025 Profile
• Iowa small businesses employ approximately 637,557 people, representing 46.0% of all employees in the state.
• The average median income for self-employed individuals running incorporated businesses is $48,000. Those with unincorporated businesses have a median income of $26,000.
• There are 2,817 SMBs in the export business, accounting for 19.2% of Iowa's $12.9 billion worth of export revenue.
• Between March 2023 and March 2024, small businesses generated 12,573 net new jobs. Firms with fewer than 20 employees drove most of that growth.
• Iowa recorded 33,444 new business applications in 2023, reflecting a 33.7% year-over-year increase in entrepreneurial activity.

Entrepreneurs of Iowa

The state ranks #9 nationally for women-owned businesses, with strong growth in self-employment across multiple sectors. Entrepreneurs of Iowa benefit from lower operating costs and a supportive business climate.

• Iowa has approximately 277,561 self-employed independent business owners.
• Women-owned businesses number 103,688, representing 35.8% of all Iowa small businesses.
• Minority-owned businesses account for 30,317 enterprises, or 10.5% of the state total.
  • Hispanic-owned: 10,682
  • Asian-owned: 8,247
  • Black/African American-owned: 11,336

Top Industries for Iowa Small Businesses

Six industries dominate Iowa's small business landscape. Construction leads the pack, followed by retail trade and real estate. Healthcare and professional services continue to expand as the population ages and tech-enabled services grow.

• Construction: 36,151 small businesses
• Retail trade: 27,204 small businesses
• Real estate, rental, and leasing: 27,246 small businesses
• Professional, scientific, and technical services: 26,461 small businesses
• Health care and social assistance: 24,122 small businesses
• Administrative, support, and waste management: 17,024 small businesses

The mining, quarrying, and oil and gas extraction sector has the smallest share of the labor force, with only 1,510 employees (0.23% of the entire state workforce).

Best Business to Start in Iowa

Given Iowa's economic landscape in 2026, the best business to start in Iowa depends on local demand and regional strengths. High-growth sectors offer strong opportunities for new entrepreneurs.

• Renewable energy shows 30-60% projected growth. Iowa ranks #2 nationally for wind energy, with 67% of power coming from renewable sources in 2024.
• Healthcare and senior services added 5,907 jobs over the past five years. The sector includes 24,122 small businesses statewide.
• Food processing remains central to Iowa's $34.98 billion manufacturing sector.
• AI and data centers are expanding rapidly, with Microsoft alone investing $4.5 billion in the state. Job growth of 30-60% is projected in related fields.
• Agricultural technology continues to evolve, with Iowa's ag sector driving demand for tech-enabled farming solutions.

Number of Businesses in Iowa's Major Cities

Business activity concentrates heavily in Iowa's metro areas. Des Moines leads as the economic hub, while Cedar Rapids and the Quad Cities region provide strong secondary markets.

Number of Businesses in Cedar Rapids Iowa

Cedar Rapids, Iowa's second-largest city, anchors Linn County's business community. The number of businesses in Cedar Rapids Iowa reflects the region's strength in manufacturing, healthcare, and financial services.

• Linn County has 20,947 total establishments (5,744 employer firms + 15,203 non-employer businesses).
• Cedar Rapids businesses represent approximately 7.2% of Iowa's small businesses.
• In the first half of 2023, the Cedar Rapids-Iowa City region registered 1,713 new business entities.

Des Moines Small Business Count

Polk County dominates Iowa's business landscape, with Des Moines serving as the state's economic engine.

• Polk County recorded 6,429 new business applications in 2023, the highest count in Iowa.
• Des Moines metro area employment reached 316,300 workers in Q4 2024.
• The region ranks as the largest employment center in the state.

Davenport and Quad Cities Business Statistics

Davenport anchors Iowa's portion of the Quad Cities metro area, which spans the Iowa-Illinois border.

• Scott County has 2,161 employer firms.
• The Davenport-Moline-Rock Island MSA provides access to markets in both Iowa and Illinois.

Starting a Small Business in Iowa

Iowa offers a straightforward process for business formation. The state has no franchise tax or business privilege tax, which simplifies ongoing compliance compared to many other states.

Iowa LLC Formation Requirements

• To form an LLC in Iowa, file your Articles of Organization with the Secretary of State. The filing fee is $50.
• State law requires every Iowa LLC to designate an Iowa registered agent available during regular business hours at a physical address within the state.
• You can search for available business names through the Iowa Secretary of State's business portal before filing.

Iowa Corporate Income Tax for Small Business

• Iowa has a corporate income tax but no franchise tax or business privilege tax.
• The corporate income tax ranges from 6% on income up to $25,000 to 12% on income above $250,000.
• S corporations are not subject to federal corporate tax. Taxable income passes through to individual shareholders, who pay federal tax on their share of corporation income.
• Iowa uses a destination-based sales tax policy. Long-distance sales within Iowa are taxed according to the buyer's address. This applies to state, county, and city sales taxes.

Small Business Financing in Iowa

Access to capital remains essential for Iowa's small business growth. Banks reporting under the Community Reinvestment Act continue to provide significant lending support, particularly for businesses with revenues under $1 million.

• In 2023, Iowa banks issued loans under $100,000 totaling $678.7 million to small businesses, a 4.6% increase despite inflationary pressures.
• Banks also provided $744.2 million to businesses with revenues under $1 million.
• Nationally, 95% of small business loans are under $100,000, with lending concentrated in metro areas like Des Moines and Cedar Rapids.
• The SBA approved over $14 million in loans for Iowa small businesses through various programs in recent fiscal years.

Sources

• SBA Office of Advocacy: Iowa 2025 State Profile
• FFIEC Community Reinvestment Act Data (2024)
• U.S. Census Bureau Quick Facts
• U.S. Bureau of Labor Statistics Business Employment Dynamics
• U.S. Chamber of Commerce Small Business Data Center
• Iowa Secretary of State Business Services
• Iowa Workforce Development Employment Data