What Small Business Trends Are Really Saying

The May Main Street Lending Report shares valuable, though not surprising, trends in an uncertain economy. The key takeaway is to pay attention to hard versus soft data. In other words, stay true to the facts instead of basing decisions on feelings. 

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Lending Takes a Hit

In March, small business lending took a sharp dip. Lending has fallen more than 12% over the past two months — the biggest drop since early 2020. This shows that both small business owners and lenders are growing more cautious as economic uncertainty continues.

Feelings vs. Facts

Even though surveys show that people are feeling nervous about the economy, hard data tells a different story. Job growth, personal income, and consumer spending remain strong, so there are reasons to stay hopeful. 

Businesses Hit Pause

Still, small businesses are pulling back. With lending down, they’re clearly saying, “Now is not the time to make big moves.” Many are choosing to wait and see what happens next.

Trade Tensions and Tariffs

One reason for the hesitation? Trade tensions, especially with China. New tariffs are making it more expensive to produce goods. Some businesses rushed to stock up on supplies before these tariffs hit. That’s causing an inventory swell — meaning many companies have full shelves for now, but that may only delay the impact. If tariffs continue or grow stronger, we could see supply chain problems in the fall or winter.

Looking Ahead

For now, both small and large businesses are hitting the brakes. Many are being careful, choosing not to invest or expand just yet. It’s not because they don’t know what could happen — it’s because they don’t know what will happen. And when confidence is low, cautious choices tend to follow.

We’ll be watching closely in the coming months to see how these trends develop.

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