Chattanooga is among the best U.S. cities for homegrown businesses

Lookout Mountain serves as the backdrop for this view of downtown Chattanooga from the Unum parking garage. Major landmarks are, from left, First Horizon Bank, the James Building, the Maclellan Building, Regions Bank, Market Court (home to Raymond James and Fletcher Bright), The Westin, Republic Centre and the Liberty Tower. / Staff Photo by Robin Rudd

With cheaper utilities, housing and taxes - combined with relatively faster internet speeds and greater small business assistance - Chattanooga is among the best cities in the country for home-based business, according to a new study.

The web site JustBusiness named Chattanooga the 6th best city in the U.S. for home-based businesses. Chattanooga is among two Tennessee cities in the top 10 and three in the top 15 for home-based businesses. JustBusiness ranked Memphis No. 3 and Knoxville No. 11 for home-based businesses among all metro areas in the country.

Eric Goldschein, the partnerships editor at JustBusiness and Fundera, said home-based businesses are being propelled by the pandemic, which has pushed more work to home environments and remote work. The U.S. Census Bureau reports business applications in 2020 are up 38.5% so far this year over last year's levels. Even in a pandemic when many companies were forced to close, the Census Bureau reports there have been 3.2 million requests for employer identification numbers, which is what a business needs to get started. In the same period of 2019, there were 2.7 million such requests for employer ID numbers.

"Increasingly, we expect home-based entrepreneurship to become a societal norm," Goldschein said. "We also expect to see demographic and geographic shifts as people become untethered from living in certain cities or regions, and can look to new cities where homes are cheaper, startup costs are lower, living is more affordable, and internet speeds are still robust enough to conduct business.

Goldschein said Chattanooga made the list because of its low home prices, low effective tax rates, and minimal ongoing costs of running an LLC.

Best cities for homegrown businesses

1. McAllen, Texas

2. El Paso, Texas

3. Memphis

4. Jackson, Mississippi

5. Lakeland, Florida

6. Chattanooga

7. Tulsa, Oklahoma

8. Toledo, Ohio

9. Oklahoma City, Oklahoma

10. Cleveland, Ohio

Source: JustBusiness

- Compiled by Dave Flessner