Small businesses still feel squeezed
The National Federation of Independent Business reports that price pressures have eased but small-business owners still feel squeezed by elevated operating costs and day-to-day challenges. That persistent margin pressure is visible at the street level, where many small firms resist passing on higher fuel or input costs to customers. For lenders, ongoing small-business strain usually means continued demand for short-term liquidity and more conservative repayment behaviours. (nfib.com)
Small-business owners are getting a little relief on inflation, but not the kind that restores normal life. The National Federation of Independent Business said on April 8 that inflation has cooled from an 8.0% annual average in 2022 to 2.6% in 2025, yet many owners still face thinner margins, tighter cash flow, and higher financing costs than they dealt with before 2020. (nfib.com) That gap between “prices are rising more slowly” and “business feels easier” is the whole story. The same National Federation of Independent Business post says the problem now is not just sticker prices but the daily work of repricing menus, managing inventory, and paying more to borrow. (nfib.com) Its monthly survey shows the pressure has eased, not disappeared. In February 2026, a net 24% of owners said they were raising average selling prices, down 2 points from January and the third straight month of slower price increases, but still above the historical average. (nfib.com) Owners are also paying workers more even as price increases cool. The National Federation of Independent Business said a net 34% reported raising compensation in February 2026, the highest reading since March 2025, which means payroll is still climbing while pricing power is getting weaker. (nfib.com) Hiring is not simple either. In February 2026, 33% of owners said they had job openings they could not fill, and 15% still named labor quality as their single biggest problem, even after four straight monthly declines in that complaint. (nfib.com) Sales improved in February, but confidence about the next few months slipped. A net 1% reported higher nominal sales over the prior three months, up 7 points from January, while the share expecting higher real sales volumes fell 8 points to a net 8%. (nfib.com) That is why many owners hesitate to push every new cost onto customers. The Federal Reserve’s 2025 Small Business Credit Survey found that firms facing higher input prices often split the difference by passing on some increases and absorbing some themselves, while relatively few changed suppliers or moved production back to the United States. (fedcommunities.org) Absorbing costs works until cash gets tight. The same Federal Reserve survey, based on more than 6,500 small employer firms fielded from September to November 2025, found that only about half had their funding needs fully met, while about one-third faced a funding gap even after applying for financing. (fedcommunities.org) Borrowing itself has become part of the squeeze. Among firms that borrowed from online lenders, 60% said borrowing costs were higher than expected, which helps explain why owners who need short-term cash often turn more cautious about repayment and expansion. (fedcommunities.org) This is not a niche corner of the economy. The Federal Reserve says firms with fewer than 500 employees make up 99.7% of U.S. employer businesses and employ just under half of American workers, so when small firms feel stuck between higher costs and reluctant customers, that strain shows up far beyond Main Street. (federalreserve.gov) The Census Bureau now tracks business conditions every two weeks through its Business Trends and Outlook Survey, because these pressures move faster than old quarterly snapshots could catch. The latest National Federation of Independent Business reading says the small-business environment still has not returned to the predictable pre-pandemic setup owners used for budgeting, pricing, and long-term investment. (census.gov) (nfib.com)
