From relief to recovery: Using federal funds to spur a small business rebound | The four types of small businesses

From relief to recovery

The four types of small businesses


July 7, 2021

“Small business” is an unhelpfully broad segment. This brief focuses on small businesses with fewer than 100 employees, with the acknowledgement that smaller businesses have experienced particular challenges during the economic crisis.

Collectively, small businesses with fewer than 100 employees constitute 97% of all businesses and account for 49% of U.S. employment.[i] Our analysis draws on a typology created by Karen Mills and Mercedes Delgado to break small employer businesses into four categories based on their industry: Exporters, Local Suppliers, Care, and Main Street.[ii] Depending on the products they provide and the consumers they target, small businesses had differing levels of exposure to the COVID-19-induced economic crisis, will have different growth trajectories during the recovery, and vary in their impact on individual wealth creation, neighborhood revitalization, and regional economic growth.


[i] Brookings analysis of U.S. Census Bureau County Business Patterns data

[ii] Delgado, Mercedes, and Karen Mills. “A New Categorization of the US Economy: The Role of Supply Chain Industries in Innovation and Economic Performance.” (2017).

[iii] Kemeny, Tom, and Taner Osman. “The wider impacts of high-technology employment: Evidence from US cities.” Research Policy 47.9 (2018): 1729-1740.

[iv] Lee, Neil, and Andrés Rodríguez-Pose. “Entrepreneurship and the fight against poverty in US cities.” Environment and Planning A: Economy and Space (2020): 0308518X20924422.

The Brookings Institution is a nonprofit organization devoted to independent research and policy solutions. Its mission is to conduct high-quality, independent research and, based on that research, to provide innovative, practical recommendations for policymakers and the public. As such, the conclusions and recommendations of any Brookings publication are solely those of its authors, and do not reflect the views of the Institution, its management, or its other scholars.

This report is made possible by the Kresge Foundation and the Shared Prosperity Partnership, for which the authors are deeply appreciative. We also want to thank colleagues who provided valuable feedback on the report: Alan Berube, Annelies Goger, Pam Lewis, Tracy Hadden Loh, Rob Maxim, and Mark Muro. The authors also thank Michael Gaynor for editing, Luisa Zottis for layout and design, Alec Friedhoff for his design of the data interactive, David Lanham for his communications leadership, and Jade Arn and Rowan Bishop for help on outreach.

About the Authors

Joseph Parilla

Joseph Parilla

Fellow – Metropolitan Policy Program
Sifan Liu

Sifan Liu

Senior Research Analyst – Metropolitan Policy Program