I use recent federal and research sources such as the Census Business Formation Statistics, the Federal Reserve Small Business Credit Survey, BLS employment data, the SBA small business profile, NFIB monthly indicators, and the Kauffman Index to ground each claim. Where possible I link directly to the primary dashboards readers can consult.
At a glance: Is the small business economy struggling?
The available evidence for 2024 and 2025 does not point to a single narrative. Some indicators, such as new business formation, remained above pre-pandemic norms, while measures of revenue, hiring, and credit access varied by sector and place. For a snapshot of formation and startup counts, see the Census Business Formation Statistics dashboard Census Business Formation Statistics dashboard
Readers should treat the phrase small business economy as a shorthand for an ensemble of measures: formation, employment, revenue, and access to capital. Each of those measures tells a different part of the story, and national averages can mask important local differences.
Point readers to a public dashboard for local formation data
Use the region filter to compare metros
Quick takeaways
Overall takeaway: formation stayed elevated but momentum cooled; credit conditions improved for some firms but costs and underwriting remained concerns; employment recovered from pandemic losses but small firms lagged larger firms in growth. The short summary above is intended to guide readers to the primary sources rather than replace them.
How to read this article
The sections that follow summarize the datasets that matter, explain what each indicator shows, and offer simple checks voters and local reporters can use to assess whether specific businesses or neighborhoods are under stress.
What we mean by the small business economy and why 2025 matters
In this article the small business economy refers to the combined behaviour of business formation, small-firm employment, revenues across sectors, and access to lending and other capital. These dimensions together shape whether local economies are producing new firms, sustaining jobs, and generating stable revenues.
We focus on the 2024 to 2025 window because it follows the acute pandemic adjustment and captures the period when many researchers and agencies tracked recovery in formation and employment while also reporting ongoing credit frictions. Key public sources for this window include the Census Business Formation Statistics, the Federal Reserve Small Business Credit Survey, BLS employment releases, the SBA small business profile, and periodic NFIB summaries Federal Reserve Small Business Credit Survey
Data snapshot: formation, hiring, revenue and credit in 2024-2025
Business formation remained above pre-pandemic norms through 2024 and into 2025, though the extraordinary surge from 2020 to 2021 slowed. For numbers and maps showing recent levels and their regional distribution, consult the Census Business Formation Statistics dashboard Census Business Formation Statistics dashboard
On employment, aggregate small-firm employment largely recovered from pandemic declines by 2024, but growth in small firms has trailed that of larger firms in several quarters. The BLS Business Employment Dynamics data provide the best periodic view of these patterns BLS Business Employment Dynamics
The Federal Reserve Small Business Credit Survey reports that many employer firms saw some improvement in credit access, but borrowing costs and tighter underwriting remained factors constraining growth plans for a meaningful share of respondents. For the SBCS findings, see the Fed report on employer firms Federal Reserve Small Business Credit Survey
Revenue signals were mixed in 2024 and 2025. Some professional and tech-adjacent firms reported stable or improved revenues while face-to-face sectors, notably hospitality and portions of retail, faced more volatility and an elevated risk of closure in some places. Monthly NFIB indicators and sector summaries track those patterns over time NFIB Small Business Economic Trends
Business formation and startup activity: who is launching firms
Formation activity stayed above pre-pandemic norms through 2024 and into 2025, but the initial post-2020 surge moderated. The Kauffman Index and the Census BFS both document elevated startup counts followed by a slowing of growth relative to the earliest surge period Kauffman Index
A higher share of early-stage firms tends to increase short-term churn. New firms often pass through a fragile phase when revenue and customer relationships are still developing, which can lead to higher closure rates even when headline formation is healthy.
Geography matters: venture and startup-oriented activity is concentrated in some metro areas while Main Street businesses in other regions face tighter credit and weaker local demand. For metro-level patterns check the BFS regional breakdowns Census Business Formation Statistics dashboard
Credit, funding and access to capital for small firms
The Fed Small Business Credit Survey for employer firms found a mixed picture: some firms reported modest improvements in loan approval and access, while many continued to cite high borrowing costs and tighter lending standards as constraints on investment and hiring Federal Reserve Small Business Credit Survey
The picture is mixed: formation remained elevated while hiring and credit conditions varied by sector and region, so local context and trendlines matter more than a single national indicator.
Lenders adjusted underwriting and pricing in response to macro conditions, and that affects which firms can expand. Reported credit stress appears uneven across sectors and places, with some firms able to secure capital through nonbank channels while others face stricter requirements from traditional lenders.
Access to capital links directly to hiring and investment choices. When borrowing is costly or uncertain, firms often delay equipment purchases, reduce hiring plans, or rely more on internal cash flow to operate. The SBA small business profile offers a complementary view of credit access for employer firms at the national level SBA small business profile
Small business employment trends and hiring dynamics
Aggregate small-firm employment recovered from pandemic losses by 2024, but in several recent quarters hiring at small firms has lagged growth at larger firms, a pattern visible in BLS employment indicators BLS Business Employment Dynamics
Lagging hiring can reduce a firm’s capacity to serve customers and to grow revenue in sectors that rely on labor-intensive service delivery. Local labor market tightness also alters the options small employers face when recruiting skilled workers.
For readers tracking local conditions, combine BLS hiring data with regional BFS and state employment releases to see whether small-firm hiring is keeping pace with demand in your metro area.
Revenue patterns, sectors under pressure, and closures
Revenue trends were mixed in 2024 and 2025. Hospitality, leisure, and some retail subsectors showed elevated volatility in revenues compared with professional or tech-adjacent businesses, according to sector summaries and the NFIB monthly reading NFIB Small Business Economic Trends
Permanent closures spiked during the pandemic and while closure counts eased by 2024 and 2025, closure risk remained concentrated in face-to-face services and in regions with persistently weak demand. The Census BFS provides breakdowns that help identify where closures remain more likely Census Business Formation Statistics dashboard
When revenue is volatile and local demand softens, firms often respond with cost changes, such as reducing hours or rethinking inventory, which can precede permanent closure if the downturn persists. Tracking revenue trendlines over multiple months helps distinguish short disruptions from sustained decline.
Regional differences: how place changes the outlook
Startup and venture-oriented growth clustered in certain metropolitan areas while Main Street firms in other regions reported tighter credit and weaker demand. These geographic contrasts are visible in the Kauffman Index and in regional BFS figures Kauffman Index
Local factors such as commercial real estate dynamics and demand cycles can shift liquidity for small firms. Commercial real estate adjustments in some metros influence operating costs and lease decisions, which in turn shape closure risk and hiring plans.
If you want to understand the outlook for firms in a specific city, consult local-level BFS filters and state economic reports rather than relying only on national averages.
How to judge whether a small business is struggling: decision criteria
Practical indicators to check include sustained revenue decline over several months, repeated staffing cuts, clear signs of credit stress such as denied loan applications, and weakening local demand. Taken together, these measures provide stronger evidence than a single data point.
A checklist approach helps: verify recent revenue lines, compare staffing and hours to pre-shock levels, inquire about recent loan approvals or rejections, and review local demand indicators such as foot traffic or regional sales tax receipts. Primary data sources for corroboration include the Census BFS and NFIB readings Census Business Formation Statistics dashboard
Common mistakes and pitfalls when interpreting the data
One common mistake is treating elevated formation as uniform strength. A rise in new business starts can coexist with fragile early-stage firms that are more likely to close in the short term; BFS and Kauffman materials highlight this possibility Census Business Formation Statistics dashboard
Another pitfall is overemphasizing a single survey result. Individual surveys provide useful signals, but triangulating across the Fed SBCS, BLS employment data, and NFIB monthly indicators gives a more reliable picture of conditions.
Practical scenarios and short case sketches
A Main Street retailer in a weaker-demand metro may see slowing sales, difficulty getting short-term inventory financing, and pressure on margins. These patterns match BFS and NFIB observations about local demand and credit stress in some regions NFIB Small Business Economic Trends
A venture-backed startup in a clustered metro may benefit from investor networks and alternative funding, even as early-stage churn remains a risk. The Kauffman Index documents how startup activity concentrates in particular metros and supports a different funding ecosystem Kauffman Index
A hospitality operator in a demand-soft region faces revenue volatility and a higher closure risk when local tourism or business travel falls. Sector summaries and BFS regional data are consistent with that pattern Census Business Formation Statistics dashboard
What to watch in 2026: indicators that will matter
High-frequency sources to follow include the Census BFS updates for formation, the Fed SBCS periodic reports on credit, BLS employment releases for hiring, and the NFIB monthly indicator for small firm sentiment. These sources together will help capture rapid shifts in the business environment Federal Reserve Small Business Credit Survey
Policy and market risks to monitor include changes in monetary policy that affect borrowing costs, regional commercial real estate adjustments that change fixed costs for firms, and local demand fluctuations tied to broader economic cycles. Observers should avoid drawing broad conclusions from a single release and instead track trendlines across primary sources.
Conclusion: a cautious, sourced takeaway for voters and local readers
The best short summary is cautious: the 2024 to 2025 evidence is mixed. Formation remained higher than pre-pandemic norms even as growth slowed, employment largely recovered but small-firm hiring lagged larger firms, and credit access improved for some while borrowing costs and underwriting remained a constraint for many. These conclusions are grounded in the Census BFS, the Fed SBCS, BLS employment data, and NFIB indicators Census Business Formation Statistics dashboard
Voters and local readers who want to assess conditions in their community should consult the primary datasets named above and combine national indicators with local-level reports. For campaign statements and how local leaders frame small business priorities, readers can review campaign statements and public filings for context without treating them as substitute for primary economic data.
Formation remained above pre-pandemic norms but growth slowed from the 2020 to 2021 surge. Elevated startup counts can coexist with fragile early-stage firms.
Aggregate small-firm employment largely recovered from pandemic losses by 2024, but hiring growth at small firms has trailed larger firms in several recent quarters.
Check sustained revenue decline, repeated staffing cuts, signs of credit stress such as loan denials, and weakening local demand; corroborate with primary datasets for trend context.
This piece is a neutral summary of public data and not an endorsement of any candidate or policy. For candidate information and local campaign positions, consult campaign pages and public filings for direct statements.
References
- https://www.census.gov/econ/bfs/
- https://www.fedsmallbusiness.org/survey/2023/report-on-employer-firms
- https://www.bls.gov/bdm/
- https://www.nfib.com/surveys/small-business-economic-trends/
- https://indicators.kauffman.org/
- https://advocacy.sba.gov/2024/09/10/small-business-profile-united-states-2024
- https://michaelcarbonara.com/contact/
- https://michaelcarbonara.com/news/
- https://michaelcarbonara.com/republican-candidate-for-congress-michael-car/
- https://michaelcarbonara.com/about/
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