Each quarter, we partner with Barlow Research to survey small business and middle market owners across the country. These conversations give us a deeper understanding of how businesses are feeling about their financial health, challenges and plans for future growth.
Here’s a quick look at what we learned this quarter and how we’re helping businesses navigate what’s ahead.
Financial Conditions: Optimism and Caution
Small businesses are holding steady when it comes to their own financial outlook, but they’re less confident about the broader U.S. economy. Middle market businesses are seeing more ups and downs, especially in their expectations for economic conditions.
Sales are up, which is great news, but profits are still under pressure. Many small businesses have raised prices to protect their margins, but 38% still report declining profits and only 19% reporting an increase in profits.
Investing in the Future: Capital Spending on the Rise
One bright spot: small businesses are investing more. Capital expenditures reached their highest point since mid-year 2024. This is a strong signal that many business owners are thinking long-term, even if cash reserves remain tight. However, excess cash reserves remain limited and employment growth is minimal in the small business segment.
Middle market businesses, however, aren’t showing the same level of enthusiasm for increased spending but are slowly becoming more comfortable, shown with a slight increase of capital expenditure investing from last quarter.
Top Concerns: Cost of Doing Business
For small businesses, the rising cost of doing business is the number one concern with 37% showing they are moderately concerned about the cost of doing business and 28% showing they are extremely concerned. Worries about government policy or regulation and tariffs have lessened since last quarter.
In the middle market, concerns about government policy or regulations have increased and the concern around tariffs has mostly remained the same.
Looking Ahead to 2025: Goals and Expectations
Optimism is fading slightly. Just over half of small businesses and middle market businesses expect to meet or exceed their financial goals in 2025, down from 62% and 63% last quarter.
Still, there’s hope. More businesses expect sales to improve or remain the same and price pressures are easing. This could lead to better profit margins in the months ahead.
Credit and Financing: A Shift Toward Bank Support
Small businesses are turning back to banks for financing and moving away from credit cards and online lenders. While only 13% applied for additional credit in the past year, more are planning to apply soon, especially those looking to invest in growth.
Middle market businesses are also seeing steady growth in credit demand, particularly for loans to support working capital and equipment purchases - this is where we may see an increase in capital expenditure spending within the coming months.
Cash Reserves: A Growing Focus on Liquidity
Cash positions have weakened slightly compared to last year. Many small businesses are prioritizing cash retention over paying down debt or distributing funds. About one-third say they could only operate for 12 months or less on current reserves.
Confidence in maximizing returns on cash is also down, with many businesses unsure how to make the most of their balances in today’s rate environment.
How We're Supporting Business Owners
We understand the challenges businesses are facing—and we’re here to help. Whether you're looking to:
We are ready to provide personalized financing solutions and expert guidance. We’re committed to helping businesses stay resilient and thrive in 2025 and beyond. Read the full 2025 Q4 Business Pulse report here.
