Small Businesses Thrive When Washington Gets Out of the Way

A strong 2025 for small businesses is a reminder that when entrepreneurs get breathing room, they tend to use it well. A new “Small Business Check Up Survey” from the Small Business & Entrepreneurship Council found that 71% of small business owners said their financial performance improved in 2025 compared to 2024, while 84% said performance met or exceeded expectations.

That is a welcome sign for the economy, but it is also a policy lesson. Lower taxes and a more stable business climate helped many firms strengthen cash flow, invest in growth, and enter 2026 with optimism. At the same time, inflation, tariffs, health coverage costs, and limited access to capital still weigh on small businesses. The good news is real, but it is not a reason for Washington to let up.

Tax Relief Still Matters

One of the clearest findings in the survey is that tax relief is helping small businesses stay competitive. SBE Council reported that 61% of small business owners saw positive cash-flow effects from the 2025 tax cuts, with the permanence of the 20% small business deduction and lower personal rates cited as especially beneficial. Looking ahead, 73% expect the tax provisions to keep helping through stronger cash flow, financial stability, and price competitiveness.

That result should not surprise anyone. Small businesses do not need more complexity, more uncertainty, or higher tax burdens. They need room to plan, invest, and grow. The survey suggests that when that space exists, many owners use it productively.

Growth Comes From Revenue, Technology, and Expansion

The survey also offers a useful reminder that small business success is driven by performance, not political slogans. Among owners who reported positive 2025 results, the most commonly cited reason was a focus on revenue generation. That was followed by adopting technologies such as AI, expanding business capacity, entering new markets, adding products or services, cutting costs, and reducing debt.

AI stood out in particular. SBE Council found that about 77% of small business owners report using AI tools. More important, most do not see AI mainly as a job killer. Instead, 56% said it is creating new opportunities or reshaping roles without reducing headcount, while only 19% said it is eliminating more jobs than it creates.

That matters because it cuts against the usual panic. For many small firms, new technology is not replacing entrepreneurship. It is making entrepreneurship more productive.

The Headwinds Are Still Real

The good news should not obscure the ongoing problems. Inflation, economic uncertainty, and tariff policy remain among the top concerns for small business owners. The survey found that 73% are still concerned about inflation, and 62% are concerned about the direction of tariff policy over the next 12 months. While 41% said tariffs are having no impact on their business, 48% reported either a slight or significant negative effect.

Health coverage costs are another major strain. Half of small business owners said their health insurance renewal costs increased for this year, including 17% who said the increase was significant. Access to capital also remains a problem, with 43% saying a lack of capital or financing is limiting their ability to invest, grow, or pursue new opportunities.

Those numbers matter because they show what still stands in the way of stronger small business growth. Washington cannot take a positive year and use it as an excuse for complacency.

Confidence Is Up, but Policy Still Matters

The survey’s overall message is clear. Small businesses are resilient. Many are growing. Many are investing. Many are using better tax policy and new technology to improve their position. But resilience is not the same as immunity. Bad tariff policy, rising health costs, and limited access to capital can still slow growth and reduce opportunity.

Small businesses have shown that they can respond well when policy moves in the right direction. The next step is to avoid reversing that progress.

CFE Takeaway

The latest SBE Council survey is good news for the small business economy. It shows that lower taxes, better cash flow, and more freedom to invest helped many firms post stronger results in 2025 and build momentum for 2026. But the survey also shows that inflation, tariffs, health costs, and financing constraints remain real obstacles. Small businesses are doing their part. Policymakers should do theirs by protecting pro-growth tax policy and removing the barriers that still make it harder to start, expand, and compete.