Small Business Statistics in Kentucky: 2026 Update

Kentucky's 393,860 small businesses employ more than 710,000 workers and represent 99.3% of all businesses in the state. From bourbon production to healthcare, small firms drive the Bluegrass economy. Here's what the latest data reveals.

How Many Small Businesses Are in Kentucky in 2026?

The SBA's 2025 Kentucky profile paints a clear picture of the state's small business landscape, with data drawn from the Census Bureau's 2022 base year.

• Small businesses employed 710,613 workers in 2022, accounting for 42.6% of total employment in the state.
• Of those 393,860 firms, 328,057 (83.3%) are nonemployer businesses with no paid employees, while 65,803 are employer firms.
• Rural Kentucky accounts for 128,752 small businesses, while urban areas host 221,025.
• In 2024, the state's nominal GDP reached approximately $298.6 billion, with real GDP growth of 2.4% over the year.
• As of December 2025, Kentucky's seasonally adjusted unemployment rate stood at 4.5%, down 0.8 points from December 2024.

Small Business Growth and Job Creation in Kentucky

Between March 2023 and March 2024, new small business openings outpaced closures across the state, and job creation numbers were especially strong.

• During that period, 12,964 small businesses opened in Kentucky and 11,181 closed, for a net increase of 1,783 establishments.
• Opening and expanding establishments added 181,507 jobs statewide, while closing and contracting ones lost 159,964, for a net gain of 21,543 jobs.
• Small businesses alone generated a net increase of 22,043 jobs over that same 12-month window.

Top Industries for Small Businesses in Kentucky

Kentucky's small business economy spans everything from construction to healthcare. These are the sectors where small firms are most concentrated and where they employ the most workers.

Industries With the Most Small Businesses

• Construction leads with 50,958 small businesses.
• Other Services (except Public Administration) follows at 48,692.
• Professional, Scientific, and Technical Services accounts for 40,762 firms.
• Transportation and Warehousing has 39,020 small businesses.
• Administrative, Support, and Waste Management rounds out the top five with 38,511.
• The utilities industry remains the smallest sector, with just 259 small businesses in the state.

Industries With the Most Small Business Employees

• Accommodation and Food Services employs 105,644 workers in small firms, covering 61.2% of total industry employment.
• Health Care and Social Assistance has 104,712 small business employees, generating $4.8 billion in annual payroll.
• Manufacturing employs 74,494 workers in small firms, or 29.2% of the sector's total.
• Retail Trade accounts for 72,647 small business employees.
• Small construction firms employ 65,753 workers, representing 83.6% of total construction employment and $3.9 billion in annual payroll.

Fortune 500 Companies and Major Employers in Kentucky

Beyond small businesses, Kentucky also serves as headquarters for several large corporations that shape the state's economic identity.

• Two Fortune 500 companies are headquartered in Kentucky: Humana and Yum! Brands (parent of KFC, Pizza Hut, and Taco Bell), both based in Louisville.
• Other major public companies include Brown-Forman (maker of Jack Daniel's and Woodford Reserve) and Texas Roadhouse.
• The state hosts 3,689 manufacturers employing 276,963 workers, with Jefferson County (Louisville) leading at 72,543 manufacturing jobs.
• Kentucky distilleries produce approximately 95% of the world's bourbon supply, supporting thousands of small businesses in agriculture, packaging, and tourism.

Starting a Small Business in Kentucky: Steps and Opportunities

If you're considering starting a small business in KY, the filing process is affordable and relatively straightforward. Here's what you need to know before registering.

• The filing fee for a Kentucky LLC is $40 (online or by mail), plus a $15 annual report fee due each year by June 30.
• State law requires every new Kentucky LLC to designate a Kentucky registered agent available during regular business hours at a physical address within the state.
• Before you file, run a Kentucky business entity search through the Secretary of State's FastTrack portal to verify your desired name is available.
• The best businesses to start in Kentucky based on employment data include construction, professional services, accommodation and food services, and healthcare.
• Business opportunities in Kentucky are especially strong in bourbon production, automotive manufacturing, logistics, and agriculture, thanks to the state's central location within a day's drive of two-thirds of the U.S. population.
• For a full cost breakdown, see our guide on Kentucky LLC costs.

Kentucky Small Business Survival Rates

Kentucky consistently ranks among the top states for small business survival. These rates, drawn from BLS Business Employment Dynamics data, help entrepreneurs set realistic expectations.

• About 81.2% of new Kentucky businesses survive their first year.
• 52.2% are still operating after five years, and 37.3% reach their 10-year anniversary.
• Kentucky ranks among the top five states for business survival rates, alongside Iowa, Wisconsin, South Dakota, and Minnesota.
• Small business owners who hire at least one new full-time employee and invest in qualifying equipment may be eligible for a Kentucky tax credit.

Kentucky Small Business Taxes: LLET, Income Tax, and Sales Tax

Kentucky's tax structure includes a few elements that set it apart from neighboring states, starting with the Limited Liability Entity Tax.

Limited Liability Entity Tax (LLET) in Kentucky

The LLET tax in KY applies to all entities with limited liability protection, including LLCs, S-corps, C-corps, and limited partnerships.

• Entities with gross receipts under $3 million pay a minimum LLET of $175.
• For entities with gross receipts of $6 million or more, the LLET is the lesser of $0.095 per $100 of Kentucky gross receipts or $0.75 per $100 of Kentucky gross profits.
• Corporations paying the LLET can apply it as a credit toward their corporate income tax liability.

Income Tax, Corporate Tax, and Sales Tax

• Kentucky's individual income tax rate drops to 3.5% effective January 1, 2026, down from 4% in 2024-2025, as part of the state's phased reduction plan.
• The corporate income tax remains at a flat 5%.
• Kentucky's statewide sales tax is 6%, with no additional local sales taxes, making the structure simpler than in neighboring Ohio or Tennessee.

Small Business Funding and Loans in Kentucky

Access to capital remains strong for Kentucky small businesses, with consistent SBA lending activity and solid CRA-reported loan volumes.

SBA Lending Activity in Kentucky

• In fiscal year 2024, the SBA approved 819 loans across the 7(a), 504, and Microloan programs, totaling $243.5 million in financing for Kentucky small businesses.
• Community Trust Bank, the state's top SBA community bank lender for 17 consecutive years, facilitated 60 guaranteed 7(a) loans totaling $12.6 million for Kentucky customers in FY2024-2025, plus three 504 projects worth $17.5 million.
• Over those 17 fiscal years, SBA approved 1,406 loans through Community Trust Bank alone, providing more than $345 million in financing across Kentucky and neighboring states.

CRA Loan Data and Small Business Credit in Kentucky

• In 2023, banks reported $954.5 million in loans to Kentucky businesses with revenues of $1 million or less.
• Total new business lending through loans of $1 million or less reached $2.6 billion.
• Loans of $100,000 or less totaled $926.4 million, reflecting strong credit access for the smallest firms in the state.

Kentucky Small Business Ownership by Demographics

Kentucky's entrepreneurial community is increasingly diverse. The ownership data below comes from the Census Bureau's Annual Business Survey and Nonemployer Statistics by Demographics (2022).

• Women own 145,412 businesses in Kentucky (42.6% of all businesses), while making up 47.1% of the workforce.
• Veterans own 21,337 businesses (6.3% of all business owners), while accounting for 4.7% of workers.
• The state has 59,679 Hispanic or racial minority-owned businesses, including 28,702 Black-owned firms, 18,169 Hispanic-owned businesses, and 13,434 Asian-owned firms.

Kentucky Small Business Exports and International Trade

Kentucky's central location and manufacturing base give small exporters a competitive edge in global markets.

• In 2023, a total of 4,637 identified firms exported goods worth $38.1 billion from Kentucky.
• Of those exporters, 3,661 (79%) were small businesses, shipping $4.1 billion in goods.
• Small firm exports accounted for 10.7% of Kentucky's total export value from identified firms.

IT, E-Commerce, and Resources for Kentucky Small Businesses

IT support for small business in Kentucky is a growing priority as more firms adopt digital tools to stay competitive. Recent data shows strong adoption across the state.

• More than 33,000 small businesses in Kentucky now use AI-powered tools on Meta platforms to automate marketing, customer communication, and daily operations.
• Over 330,000 Kentucky businesses maintain an active Facebook presence, with 98% classified as small or medium-sized.
• Kentucky-based small businesses selling on Amazon averaged over $180,000 in annual sales and collectively shipped more than 20 million items in 2024.
• For growing businesses that need HR and payroll support, PEO providers in Kentucky handle benefits administration, workers' compensation, and regulatory compliance.

Frequently Asked Questions About Kentucky Small Businesses

These are the questions Kentucky entrepreneurs and researchers ask most often about small business data in the Bluegrass State. We've pulled the answers directly from SBA profiles, BLS reports, and state-level tax guidance.

Sources

• SBA Office of Advocacy – Kentucky 2025 Small Business Profile – Small business counts, employment, exports, lending, and demographics.
• U.S. Bureau of Economic Analysis – GDP by State, Q4 2024 – Kentucky GDP and real growth rate for 2024.
• KYSTATS – 2024 Annual Unemployment Data – State-level unemployment figures.
• NKY Tribune – SBA FY2024 Kentucky Lending – Total SBA loan approvals for Kentucky in FY2024.
• FFIEC – Community Reinvestment Act Data – CRA-reported small business lending volumes in Kentucky.
• Kentucky Chamber – Small Businesses Embrace AI (2025) – AI and digital tool adoption among Kentucky small businesses.