May marks National Small Business Month, a recognition that dates back to 1963 when President John F. Kennedy first established National Small Business Week. Over time, that observance expanded into a month-long celebration of the vital role small businesses play in the American economy.
Today, small businesses remain a cornerstone of economic activity. According to the U.S. Chamber of Commerce, there are more than 36 million small businesses across the country, employing over 62 million people—nearly half of the private workforce—and contributing more than 45% of the nation’s economic output.
Yet behind those numbers lies a growing set of challenges.
Access to capital continues to be one of the most persistent barriers for small business owners. A 2025 report from Cardiff Inc. described demand for funding as reaching a “fever pitch,” driven by the need to cover operating expenses and fuel expansion. However, that demand has collided with tighter lending standards from traditional banks, disruptions to federal Small Business Administration loans, and a broader economic climate marked by inflation and high interest rates.
For many entrepreneurs, the result has been a shift away from traditional banking institutions. Instead, business owners are increasingly turning to alternative lenders that offer faster approvals, fewer requirements, and more flexible access to funds.
At the same time, small businesses are leaning into innovation to remain competitive. A recent report from OnDeck and Ocrolus found that 93% of small business owners still expect growth, with more than half now using artificial intelligence tools to streamline operations, reduce labor costs, and improve efficiency. Among those adopting AI, nearly 90% reported a positive impact.
Still, optimism is being tested.
Global instability, including the recent conflict involving Iran, has contributed to rising oil prices, increasing costs for transportation, goods, and everyday operations. Meanwhile, the Small Business Optimism Index from the National Federation of Independent Business recently fell below its long-term average, signaling growing concern among business owners.
For many—particularly minority- and women-owned businesses—these pressures are compounded by limited access to federal contracts, shrinking consumer spending, and continued barriers to capital.
Even so, small business advocates emphasize resilience.
Strategies such as tightening margins, diversifying supply chains, investing in automation, and maintaining relationships with multiple funding sources are becoming essential for survival. Increasingly, businesses are also rethinking hiring, with some shifting away from entry-level roles in favor of workers skilled in AI and digital tools.
As National Small Business Month unfolds, one reality is clear: while small businesses remain the backbone of the economy, they are navigating one of the most complex and uncertain landscapes in recent years.
