Despite recent wobbles, including a more than 10% drop from its all-time high earlier this month, the S&P 500 is still up more than 160% from its level at the onset of Covid in 2020. But the smallest businesses have yet to fully recover from the pandemic, and now are slipping again. For the first time in three years, more small businesses reported a drop in revenue than an increase in 2024.
That’s according to the 2025 Report on Employer Firms: Findings from the 2024 Small Business Credit Survey, conducted from September to November and released today. The survey gathered responses from more than 7,600 firms with fewer than 500 employees and is meant to give policymakers and lenders a snapshot of business conditions on Main Street.
The share of firms reporting year-over-year revenue growth remained well below pre-pandemic levels, with 3% more companies saying sales declined over the preceding 12 months than those who said they increased. In 2018 and 2019, the net positive share (that is the difference between those who reported higher revenue and those who reported lower) hovered around 35%. That kind of performance helped build confidence. In those same years, about 60% more firms said they expected sales to rise rather than fall in the year ahead. Since 2021, that measure hasn’t gone above 40%. It helps explain why 57% of firms in this year’s survey cited reaching customers and growing sales as their top operational challenge, making it the most common complaint in 2024, overtaking hiring and retention as the biggest obstacle.
That struggle to grow sales stands in contrast to what’s happening at the top of the market.
By comparison, 75% of firms in the S&P 500 reported year-over-year revenue growth for fiscal 2024, according to data from FactSet. However, the index may be benefiting from its mix of industries. Tech companies, for example, which make up about 30% of the gauge, often have recurring revenue and stronger pricing power.
Jerry Freedman, a principal at Freedom Business Financing, which helps buyers secure SBA loans for small business acquisitions, says the story on the ground is more nuanced. “I haven’t necessarily seen a consistent decline in revenues, but I have seen tighter margins and deteriorating cash flow,” he says. In part, Freedman says, that’s because receivables are ballooning and cash is taking longer to show up.
Regardless, the outlook isn’t all gloomy.
Fewer firms said costs were going up, and fewer raised prices to match. That might help explain why sales look soft. It’s not necessarily that customers are spending less–it could also be that small businesses aren’t pushing through as many revenue inflating price hikes.
Other takeaways from the Fed survey: Most small firms still rely on traditional banks for financing, but fewer are applying for loans at large banks than in years past. Approval rates were steady, but satisfaction with lenders, especially online lenders, dropped sharply. Meanwhile, only 19% of firms qualified as “growing” in 2024, meaning they added both revenue and employees and plan to keep hiring, a slight decline from the prior two years.
Firms with more than $100,000 in outstanding debt held steady at 39%, which is still higher than pre-pandemic levels. That helps explain why “too much debt” has become the second most common reason firms are denied credit, trailing only lender requirements being too strict. In 2021, just 22% of applicants cited too much debt as a reason for denial, the lowest among six options. In 2024, that figure nearly doubled.
Still, none of that seemed to weigh on the business-for-sale market. Buyers moved quickly in 2024 and paid more, not less, Forbes has previously reported. The median sale price rose 3%, a sign that even if running a small business hasn’t gotten easier, selling one hasn’t gotten harder.
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