B of A Says Small Business Small Business Saturday a Success but Profit Margins are Disappearing

December 29, 2025

Bob Coleman
Founder & Publisher

Main Street Monday: B of A Says Small Business Small Business Saturday a Success but Profit Margins are Disappearing

Small business owners found some seasonal breathing room in November, but the underlying direction is starting to turn. Profits stayed positive, helped by holiday-driven activity like Small Business Saturday. Owners estimate that weekend alone represents roughly 20 percent of annual sales, which keeps late November a critical cash flow moment for Main Street.

The problem is what sits underneath that seasonal lift. Year over year profitability growth slipped below zero for the first time in 18 months. That matters. It means that even when sales are there, margins are not holding.

Pricing pressure is a big part of the story. The share of owners raising prices jumped 13 points to 34 percent, the largest single month increase ever recorded in the NFIB survey. Moves of that size do not happen casually. Costs that were once absorbed are now being pushed through. Tariffs, input inflation, and supplier pricing are landing directly on customers.

The impact is uneven. Wholesale trade posted some of the sharpest profitability declines, especially in durable goods like electronics and furniture. Those businesses tend to feel cost pressure first and pricing resistance fastest, particularly when consumer demand is inconsistent.

Labor data reinforces the same trend. Payments to firms that are hiring fell 4.6 percent year over year in November, according to Bank of America small business account data. Hiring is not collapsing, but it is clearly slowing. Lenders are already seeing that shift in their portfolios.

Despite the pressure, owners are not backing away. Short-term optimism ticked up, and when business owners look five years ahead, artificial intelligence dominates the conversation. The 2025 Bank of America Business Owner Report shows AI is no longer viewed as experimental. It is being treated as a core tool for efficiency, pricing control, and scale.

Seasonality is still providing support, but structural stress is building underneath. Margin compression, price sensitivity, and a softer labor market are becoming part of the baseline. At the same time, the most forward-looking borrowers are investing in technology to offset those pressures.

View Bank of America’s Small Business Checkpoint Survey here.