Small Business Owners Optimistic for 2025, but Urge Washington to Act on Key Challenges

Small Businesses are Optimistic about Growth in 2025, yet Persistent Economic Headwinds Remain

69% of small businesses are optimistic about the financial trajectory of their business in 2025, and 78% have plans to grow their business this year.

46% of small business owners expect to create new jobs in 2025, while 37% expect to maintain the same number of jobs.

However, hiring remains challenging for small businesses. 44% of small businesses are currently hiring full-time or part-time employees, but 89% of small businesses hiring are finding it difficult to recruit qualified employees.

• They cite competition with larger employers on pay and benefits (62%), lack of qualified workers (53%), and high labor costs (52%) as their top challenges recruiting qualified candidates.

• 33% of small businesses have lost employees or potential employees because their business doesn’t offer the same types of benefits that larger employers offer, such as paid leave, retirement, healthcare, and child care.

Access to affordable capital remains out of reach. More than half (53%) of small businesses cannot afford to take out a loan given current interest rates and 88% said it would help their business if interest rates were to fall.

35% have applied for a new business loan or line of credit in the past year and 80% of them report that it was difficult to access affordable capital.

Small Business Owners Call for Action: Tackling Inflation, Cutting Red Tape, Expanding Workforce Benefits, and Boosting Access to Capital are Top Priorities

More than half (57%) of small business owners said their business is being held back by regulatory red tape and compliance.

95% of small business owners believe the federal government should be doing more to tailor programs and services that reflect small business owners’ realities and needs.

Top 3 small business priorities for the new administration:

1.  Address inflation (54%)
2.  Expanding healthcare, retirement and paid leave benefits (37%)
3. Reform tax policy (34%).

89% of small business owners say it is important for Congress and the new SBA Administrator to comprehensively modernize the SBA and think the SBA should prioritize the following changes: Increase access to affordable capital (50%), decrease the regulatory burden and cut red tape for small businesses (47%), support more workforce development and training (34%), modernize communication systems and technology (34%), and increase small business procurement goals and accountability (32%).

Tax Reform is Top of Mind, as Small Business Owners Call for Simplification and Better Incentives to Drive Growth

73% said the current federal tax system is unfavorable for small businesses. Small business owners report the following challenges with the tax code: Tax credits and incentives are not scaled for businesses of my size (63%), the tax code is overly complex and confusing (55%), and it is difficult to maximize expenses (33%).

• Small businesses want Congress to prioritize increasing incentives for small businesses (82%), preserving the small business deduction (74%), lowering taxes (60%), and simplifying the tax code (60%).

Small Businesses Look to Innovate, Embracing AI and Seeking Training for Technology Adoption

60% of small businesses are currently using artificial intelligence (AI). Small business owners cite increased efficiency and productivity (80%), streamlined operations (47%), and better data for decision-making (46%) as key benefits.

• However, 44% of small business owners said they do not have access to the resources and expertise necessary to successfully deploy AI and 76% support government policies to help small businesses adopt new technology such as AI.
   

Survey of 1,188 Goldman Sachs 10,000 Small Businesses participants conducted by Babson College and David Binder Research from Feb. 10th-Feb 17th, 2025.  The survey included small business owners from 49 U.S. states, 2 U.S. territories and the District of Columbia.