Federal Reserve Bank of Cleveland releases Small Business Credit Survey report showing small firms’ growth expectations at their lowest since 2020

The Federal Reserve Bank of Cleveland published the 2026 Report on Employer Firms, drawing on the 2025 Small Business Credit Survey, which finds small businesses scaling back expectations for revenue and employment growth to their lowest levels since 2020, while remaining above that low point. Reported outcomes for revenue, employment and profitability were broadly steady but still below pre-pandemic levels, and for a second consecutive year slightly more firms reported revenue declines than increases. Rising costs was the dominant financial challenge, while reaching customers and growing sales was the top operational challenge. On international trade, 48% of respondents sourced at least some inputs from outside the United States in 2024, and 84% of those firms reported higher input costs, with 76% passing on at least some cost increases and 60% absorbing at least some portion. Online lender application rates increased for a fifth consecutive year and were similar to small bank application rates, with firms citing faster decisions and perceived funding chances, although 60% reported borrowing costs higher than expected. Debt-free firms rose to 31% from 29%, while 38% held more than USD 100,000 in debt, and 46% reported using artificial intelligence, most commonly for writing or marketing, individual productivity, and planning or analysis.