By all counts, the past month hasn’t been kind to small business owners. With the Bureau of Labor statistics reporting a nearly million-job shortfall since March, and with tariff worries sapping consumer confidence and spending, the current business landscape is looking tough.
Despite this, business owners are remaining optimistic about their future sales and growth, possibly bolstered by tax cuts and new Small Business Administration lending rules that make it easier to borrow and more small business grants. Here’s the deep dive on September’s small business pulse.
What the small business environment is like for September
September’s business temp check reading as Challenging. While optimism remains high with a resilient economy, especially with the chance of a Fed rate drop this month, shrunken hiring outcomes are restricting wages and consumer spending, presenting a tough environment for businesses.
Here’s a quick breakdown of the current business temperature. Read our full methodology.
|
Category |
Our score |
Why that score? |
|
Business Confidence Index |
Fair |
The NFIB’s Small Business Confidence Index rose by .3 points to 100.8, still above the 52-year average of 98, signaling that small business owners are holding strong despite uncertainty. |
|
Fed rate |
Challenging |
The current Fed rate is sitting at 4.25 to 4.50 percent, keeping borrowing costs high. |
|
GDP |
Great |
The US GDP is currently projected at 3.0 percent growth, demonstrating a stable market despite volatilities. |
|
Inflation |
Fair |
While inflation is currently at 2.7 percent – still slightly off from the economic target of 2.0 – it hasn’t risen from last month. |
|
Hiring rate |
Difficult |
Numbers for newly-added jobs for August show a cratering labor market, showing less confidence from hiring firms and pushing the unemployment rate to 4.3 percent. |
|
SBA-approved loans |
Difficult |
Both the number and the amount of SBA-approved loans are down from last month and the year’s overall average, indicating fewer applications and/or tightening standards. |
So what now?
Despite a floundering job market and continual uncertainty from tariffs, small business owners have chosen to remain confident for the month of August leading into September. With the GDP staying at a stable 3 percent and inflation still sitting at 2.7 percent, many entrepreneurs are forecasting strong sales into the future, according to the National Federation of Independent Business.
Small business operators are increasingly optimistic, buttressed by the generally business friendly regulatory environment in Washington and what has generally been a resilient U.S. economy. Uncertainty may continue to be a feature, not a bug, for the U.S. economy, and the global geopolitical backdrop.
— Mark Hamrick, Bankrate Senior Economic Analyst
While a long-awaited Fed drop in the later part of September may bring some relief – and potentially boost the economy – it may take some time to see the effects.
“Because monetary policy (interest rates being the primary tool for the Fed) work with ‘long and variable lags’, it may take some time for the central bank’s medicine to have a significant impact,” Hamrick says. “But the net effect will be to remove restrictions as the Fed takes its foot off the brake, helping the economy to maintain some momentum.”
As such, here are the key business moves to make in September.
- Continue vigilance on import costs. Small business owners should continue to stay vigilant on their import costs in the environment of fluctuating tariff policies.
- Engage with local resources. One positive of difficult economic circumstances is that many public and private resources are continuing and creating initiatives to support small businesses. Consider joining local groups like regional chambers of commerce, or signing up for newsletters that will keep you informed about resources you can take advantage of.
- Keep key business documents updated and your story organized. Make sure you know where to find your business’s financial information, and keep it updated. Knowing how to tell your business’s story will help you in an emergency, or when capitalizing on new growth opportunities.
- Embrace automation. AI tools such as answering services, report summaries and schedulers can help address inefficiencies in your workflow and connect gaps in your labor force, helping you avoid missed revenue opportunities and creating more efficiency.
Here’s the latest buzz on news you should be paying attention to, and how you can respond.
Fed’s predicted rate drop builds cautious optimism
TL;DR: A weak jobs market, relatively stable inflation and shakeups in the Federal Reserve’s board of governors have some hoping for a mega-drop in the Federal Funds rate for September.
Amidst a cratering job market, inflation both stubbornly sitting at 2.7 percent and remaining stable despite tariff chaos, and rising tensions between Fed chair Jerome Powell and President Donald Trump, experts are remaining cautiously optimistic for a Fed rate drop on Sept. 17th’s meeting. The question remains as to how much the rate will be dropped – and if there are more drops coming for the remainder of 2025.
With the current Fed rate sitting at 4.25 to 4.5 percent, borrowing costs are remaining high for both consumers and businesses, with ripple effects on hiring, a locked-up house market and the creation of new businesses. Proponents of a rate drop claim a long-due cut will boost the economy and revive the labor market. Economic experts, however, warn that cutting rates too much and too soon will only fuel the fire for inflation.
Complicating matters is Trump’s firing of Federal Reserve governor Lisa Cook over claims of mortgage fraud. While Trump’s replacement of Cook could possibly give his administration a majority on the board and lead to the cuts the president is demanding, the threat to the Fed’s independence may have larger economic implications that lead to a more cautious cut schedule.
What does this mean for my business?
- Consider getting ready for a refinance. With rates possibly lowering, having the documents, applications and funds for a refinance can snag you a lower rate on your current loans.
- Start rate shopping. Some lenders have already started dropping rates in anticipation of the Fed cut, so see what you prequalify for.
- Boost your business and personal credit score. Having a high score will increase your chances of getting the best rate possible.
How the Federal Reserve affects business loans
The Fed rate changes can have a broad impact on businesses, including the employment rate and the money supply for banks, businesses and consumers.
Read the full story
New tariffs roll out, create downhill impact
TL;DR: As small businesses wait to see the full impact of active and looming tariffs, several express that uncertainty is the most difficult thing to grapple with.
The most recent wave of tariffs, which began to kick in on Aug. 7, include reciprocal tariffs on the U.K., Canada, Brazil and more. Most recently, tariffs of 50 percent on goods imported from India took effect on Aug. 27 — 25 percent plus another 25 percent for India’s purchase of Russian oil.
In addition, the Aug. 22 end to an exemption that allowed packages worth less than $800 to pass into the U.S. duty free has resulted in several European countries suspending postal service to the U.S. until they receive more clarity about the policy, which could have an impact on many small businesses who rely on smaller shipments from overseas.
As far as the impact on small businesses as a whole, many have expressed that the uncertainty more than anything else is what’s creating the most difficulty right now. “With the constant adjustments and reversals, how can you confidently plan inventory or negotiate supplier contracts?” says Marty Bauer, Director of Partnerships & Ecommerce Expert at Omnisend, an e-commerce marketing platform. “Fluctuating international tariffs have made it difficult to give customers clear cost estimates, which has occasionally deterred international sales,” echoes Patrick Warren, CEO of Litespeed Racing, a company that specializes in performance wheels for street and race cars.
What does this mean for my business?
- Consider suspending impacted products or looking for new suppliers. Finding new suppliers for the impacted portion of your inventory, or suspending it altogether can be a temporary solution to weather the changing policies.
- Change prices. Raising prices, though blunt, can also be a solution, especially if you are transparent about exactly what supplies and components have been impacted by tariffs.
- Stay close to your customer base. No matter what action you take to offset the impact of tariffs, make sure you stay open and transparent with your clients and customer base. Changes in price or quality can drive people away when they don’t understand the cause, but many who support small businesses can be understanding and loyal, even through tough circumstances.
How tariffs impact small businesses
Here’s what you should know about tariffs and how they can affect your business.
Read more
Small businesses struggled to fill open positions in July
TL;DR: A July jobs report by the National Federation of Independent Business (NFIB) revealed that 33 percent of small business owners reported job openings that they couldn’t fill.
Small businesses in certain industries may struggle to attract quality candidates to fill open positions. A recent jobs report by the National Federation of Independent Business (NFIB) revealed that 32 percent of small business owners reported unfilled openings in August. While this number is the lowest since December of 2020, it’s still much higher than the 25 percent historical monthly average.
Some of the highest rates of unfilled openings were in key industries such as transportation and manufacturing (41 percent) and construction (a whopping 49 percent). Despite a backdrop of economic turmoil, 21 percent of businesses reported labor quality, not cost, as the most important problem they faced in July.
These data may indicate that small businesses in certain industries could struggle to keep up with growth resulting from initiatives like American onshoring, as impacted industries could struggle to find the quality candidates they need to meet growth needs. In addition, recent crackdowns in immigration have reduced portions of the skilled workforce in industries like construction, and higher costs don’t leave much room for wage raises.
What does this mean for my business?
- Consider other benefits you can offer. Money is important, but there may be other ways to incentivize talent, even if you can’t compete with larger corporate wages. Consider what other benefits — such as growth and development opportunities, or flexible work schedules — you could offer without taking too much of a financial hit.
- Leverage intangibles. Intangibles like connection and community also have an impact on a desirable workplace, even despite potentially lower pay.
- Invest in automation where you can. As more of a last resort, consider investing in anything you can automate, even as a temporary solution to weather economic conditions.
Public and private sector sources rally around small businesses
TL;DR: Multiple public and private sector sources, including local governments around the country, are supporting small businesses through grants and other initiatives.
The television company Comcast has announced a new round of small business grants. 500 grants will be awarded to businesses around the country, an initiative of Comcast RISE, which is dedicated to fueling growth of small businesses. In addition to a monetary grant of $5,000, businesses in Boston, Grand Rapids, Nashville, Seattle and South Valley, UT will receive a “technology makeover,” education resources and media support through Comcast Advertising.
For business owners that use Square, the payment services platform announced a new grant program that will award $10,000 to select Square sellers, as well as business accounting, financial and technical support, and access to resources and networking opportunities.
On the public sector side, the National Institute of Standards and Technology (NIST) from the Department of Commerce has awarded over $1.8 million in funding to 18 small businesses in the Small Business Innovation Research (SBIR) Program.
On a local level, many states and cities around the country have introduced initiatives to help small businesses with grant dollars, including Flint, MI, Atlanta, Buffalo, NY and the state of Massachusetts. Funding purposes vary from program to program, and cover everything from working capital, startup expenses and property improvements.
What does this mean for my business?
- Start locally. Many of these grants are going out on state and local government levels, which are likely to be less competitive than national grants. Start with your local government page or SCORE office to see what opportunities might be available to you.
- Consider applying, even if you haven’t been actively looking for funding. Even if you haven’t been searching for funding, or aren’t in dire need yet, consider submitting an application. It may spark an opportunity for growth, or end up coming in at the right time.
- Prepare your story and organize your documents. Having your business’s story prepared, and general documents updated and accessible will make it easier to capitalize on opportunities that arise quickly.
SBA proposes increase in size standards for 263 industries
TL;DR: The SBA has proposed an increase in monetary-based size standards for small businesses in 263 industries.
The SBA has set standards for what qualifies as a small business, based on either number of employees or by annual revenue, depending on the industry. For example, businesses in the manufacturing industry qualify based on the number of workers they employ, while the majority of those in agriculture qualify based on annual revenue.
The largest number of changes fall within the retail trade, professional services, scientific and technical services and health care and social services industries. While this makes SBA loans available to a wider range of businesses, it may also result in reducing the number of businesses that qualify for SBA loans when paired with tighter SBA loan credit requirements, according to Brennan Quenneville, head of SBA lending at Grasshopper Bank.
What does this mean for my business?
If your industry will be impacted by these changing requirements and you anticipate needing capital, Quenneville recommends starting your SBA loan application sooner than later. “Don’t wait until it’s too late, either for your business’s needs or for the program’s availability,” he says.
Small business debt is high
TL;DR: Against the backdrop of consumer credit card debt at an all-time high, small businesses are also experiencing high amounts of loan debt.
Nearly 40 percent of small businesses surveyed in the Fed’s annual Small Business Credit Survey reported $100,000 or more in debt in 2024. Contributing factors may be all-time highs in consumer credit card debt that have limited business owners’ funding options, high interest rates that make debt more difficult to pay off and a backdrop of economic uncertainty and higher costs overall.
Nearly all businesses surveyed reported financial challenges — including things like rising costs of goods and services, uneven cash flow and weaker sales — in 2024, according to the Fed’s Small Business Credit Survey. Paired with the high debt, this points to the fact that many businesses have turned to borrowing just to make ends meet, according to Patrick Reily, founder and CEO of Uplinq.
2025 has been a rollercoaster ride for many small businesses, who have navigated high federal interest rates, looming tariffs and labor reduction due to immigration enforcement, not to mention slow recovery from both the Covid-19 pandemic and the inflation that followed. Though many anticipate an upcoming cut in federal interest rates, small businesses in particular “are facing more constrained access to credit, and what is available comes at a much higher cost,” says Reily.
So what does it mean for my business?
- Look for low-cost, alternative financing where available. If you do find yourself needing to borrow capital for your business, make efforts to find low-cost funding, even through alternative lenders like online lenders or CDFIs. This may mean doing more extensive research, or waiting a few extra weeks.
- Watch for a drop in interest rates. The Federal Reserve is expected to announce a cut in rates at its September meeting. If rates continue to drop, it could be a good time to reconsolidate high-interest debt.
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