May is recognized as National Small Business Month, a tradition that began in 1963 when then-President John F. Kennedy designated National Small Business Week. The “Week” became a Month,” celebrating small businesses as the backbone of the U.S. economy.
According to the U.S. of Commerce, as of February small businesses numbered more than 36 million, employed 62.3 million people—nearly half of the country’s private workforce—and contributed 45.3 percent to its gross domestic product (the total output of goods and services).
Yet, small businesses repeatedly cite access to capital among their biggest challenges. Last October, small business lender Cardiff Inc. reported that small business demand for capital reached “fever pitch” in 2025, driven by needs for operating expenses and expansion. Cardiff’s 2025 “State of Small Business Lending” study opened with a grim assessment, defining the sector as one “defined by a powerful and paradoxical surge in the demand for business funding.”
High demand, Cardiff explained, collided with banks’ tighter credit standards for small business loans, a federal government shutdown that froze critical Small Business Administration loans; and an economic environment of persistent inflation, high interest rates, and tariff and trade policy uncertainty that increased the cost of goods, services and labor.
Still, small businesses entering 2026 were optimistic about future growth. Business owners planned for expansion, bypassing traditional banks for capital in favor of non-bank lenders offering less stringent credit requirements, ease of application and speed. Many owners were adopting artificial intelligence to mitigate the high cost of human labor, especially in marketing and entry-level positions.
In their most current Small Business Cash Flow Trend Report, published in January, small business lender OnDeck and Ocrolus, an AI workflow and analytics platform, said small business confidence remained resilient heading into the new year. Among small business owners surveyed, they said, 93 percent projected growth; more than 76 percent chose non-bank lenders over traditional banks; and 56 percent used AI, with 89 percent of those reporting a positive impact on their business.
Then on Feb. 28, the United States went to war with Iran. Oil prices spiked, taking with them the cost of everything from fuel to food. In March, the Small Business Optimism Index published by the National Federation of Independent Businesses tumbled below its 52-year average, doing so for the first time since Washington announced “Liberation Day” tariffs in April 2025.
At the dawn of National Small Business Month 2026, pressures of an uncertain economy, diminishing hopes for a quick end to the war with Iran, rising costs, cash flow, inflation, access to capital and to federal lending and contracting opportunities, especially for minority and women-owned businesses, and increasingly spendthrift consumers –all remain stark for the country’s small businesses.
Small businesses advocates advise resilience strategies, including tight margin management; diversified supply chains and careful control of the cost of goods; investing in automation and AI tools that reduce reliance on human labor while tightening control over inventory and customer data; and maintaining relationships with both bank and non-bank lenders in order to have a buffer when credit conditions tighten.
Businesses appear to be banking on AI more than ever. A Resume.org survey of 1,000 businesses, published in March, found that of found that one in five companies have already stopped hiring entry-level workers because of AI; half will stop hiring entry-level workers by 2027; and companies are prioritizing hiring for AI-focused roles and workers who can use AI effectively.
Without a doubt, however, these are trying times for small businesses.
