Main Street Monday: Small Business Optimism on the Rise Says NFIB
June 16, 2025
Bob Coleman
Founder & Publisher
Main Street Monday: Small Business Optimism on the Rise Says NFIB
Small business owners have reasons to feel positive heading into the summer, as optimism levels improved in May, according to the NFIB Small Business Economic Trends Report. The Small Business Optimism Index climbed three points to 98.8, slightly surpassing the 51-year average. This boost was driven primarily by improved expectations for business conditions and sales growth. However, uncertainty remains a challenge, with the Uncertainty Index increasing by two points from April to 94.
Navigating Credit Markets and Financing Challenges
Credit conditions showed a mixed bag in May. While fewer small business owners reported difficulty obtaining loans compared to April, financing costs continue to rise. A net 7 percent of owners reported paying higher rates on recent loans, with the average rate for short-term loans at 8.7 percent. Despite a slight dip in borrowing activity, 25 percent of owners still reported funding their businesses regularly. While credit remains accessible, high mortgage rates are cooling housing activity, impacting broader economic growth.
Shifts in Capital Spending Priorities
Capital investments saw some declines, with only 56 percent of small business owners making expenditures in the past six months—the lowest figure of 2025 so far. Spending on fixtures, furniture, and new buildings all fell compared to April. However, plans for future capital outlays rose by four points, signaling cautious optimism and the highest planning levels this year.
Key Challenges for Small Businesses
Taxes emerged as the dominant concern for 18 percent of owners—the highest level since December 2020. Labor quality concerns dropped to 16 percent, marking a significant shift, while inflation and government regulations remained steady at 14 and 9 percent, respectively. As owners navigate these challenges, adapting to evolving credit markets and tax burdens will be critical.
Small businesses are resilient, but vigilance in addressing rising costs and tax concerns is vital for sustained growth through 2025!