Small Business Earnings Are Rising, Despite Economic Uncertainty

Forbes

2 days ago

Businessman sees an increase in earnings.
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Small businesses earnings are rebounding from lower figures in Q1, showing resiliency amidst economic uncertainty.
According to the most recent Biz2Credit's monthly Small Business Earnings Report (April 2025 figures), which examines a number of small business financial metrics, average monthly earnings were up to $47,700 in April 2025, up $9,100 from March's figure. This is a consistent run of monthly gains, with earnings rising 48% since January.
Average monthly revenues in April were $522,400, a decrease of $9,500 from the March 2025 figure of $531,900. However, average monthly expenses dropped even more dramatically from $493,300 in March to $474,700 in April– a decrease of $18,600, according to the report, which draws from over 100,000 completed financing applications submitted to Biz2Credit's online funding platform.
A year ago (March 2024), average revenues were $692,900, while average expenses were $651,200. Average earnings were $41,700, a figure that is $3,100 more than the average earnings in March 2025. Additionally, inflation has seen a significant decline, from 3.4% in April 2024 to 2.3% in April 2025.
However, tariff-related worries have kept small businesses on edge as they struggle to make revenue projections. Q1 was particularly pressured as the new administration came in and began implementing new trade policies, which initially sent markets and small business sentiment plummeting at an alarming rate.
The current economic climate for small business owners in the U.S. is mixed, as entrepreneurs are expressing cautious optimism regarding inflation and their own earnings, along with significant concerns about the future. For instance, 78% of small business owners plan to grow their businesses in 2025, and 46% expect to create new jobs, according to a recent national survey by Goldman Sachs. Further, the study found that nearly seven in 10 (69%) small business owners feel positive about their financial outlook for 2025.
Meanwhile, the NFIB Small Business Optimism Index fell to 95.8 in April 2025, marking its second consecutive month below the 51-year average of 98. 'Uncertainty continues to be a major impediment for small business owners in operating their business -- affecting everything from hiring plans to investment decisions,' said NFIB Chief Economist Bill Dunkelberg.
In its 10,000 Small Businesses Voices study, Goldman Sachs said more than half (53%) are reluctant to take out a loan given current interest rates and a striking 88% shared lower interest rates would help their business, since many loans are variable rate loans.
All eyes will be on the Federal Reserve's next Federal Open Market Committee meeting, which takes place June 17-18. With inflation approaching Fed Chair Jerome Powell's oft-stated goal of 2% inflation, the central bank might be willing to lower interest rates again. Since returning to office, President Trump has put pressure on Powell to lower rates, but the Fed has continued its cautious approach.
Related: 3 Reasons Small Businesses Should Borrow At Today's Interest Rates
Despite economic uncertainty, small and medium businesses have found a way to remain economically strong despite trade policy uncertainty. Tariffs remain a top concern for small business owners who continue to await further clarity from the White House about trade policy and tariffs before as they make pivotal business decisions.
Since January, small business expenses are down 10%, while revenues dipped 5%, which accounts for the increases in average monthly earnings. That cushion has helped small business owners stay afloat during the economic uncertainty related to tariffs, which have been on-again, off-again over the past few months. Even though there has been negative sentiment this year, the bottom line is that small businesses are seeing increased earnings in 2025.
Related: What Trump's Tariffs Will Mean For Small Businesses
Meanwhile, inflation has slowly but consistently been easing, which is good news for small businesses. Gasoline prices are about 45 cents per gallon lower than they were a year ago, according to the U.S. Energy Information Administration. Egg prices, which had risen so far and so fast in 2024 that they became a presidential campaign issue, have dropped more than 60% this year from an average of $6.49 a dozen on January 21, to an average of $2.52 per dozen nationally now.
Additionally, business operators have been looking for ways to cut back expenses, resulting in earnings swinging upward for the first few months of the year. Thus far, the Small Business Earnings Report has indicated that they have been successful in running leaner operations. If interest rates do indeed go down later in mid-June after the next FOMC meeting, the cost of capital should decline for many companies that are paying back variable rate small business loans. We will know shortly whether or not it will happen.
With summer being a busy season for many small businesses, the climate certainly exists for the trend of increased earnings to continue. Whether higher tariffs go into effect or not, they have shown resilience in operating their businesses during a somewhat turbulent economic period. If things continue in a positive direction overall, small business earnings should continue to move upward.