Are businesses turning a corner in 2025? It certainly looks like it
Small business optimism has hit its highest point in six years, according to the NFIB Small Business Optimism Index
Conditions for lending have reached their highest point in three years, according to the American Bankers Association Credit Conditions Index
60% of small business decision makers expect to make more revenue in 2025 than the year prior, according to a new survey.
Here at Fora Financial, we received a record number of financing applications in January 2025 (we have been in business since 2008), even after growing 28% in 2024. Things aren't slowing down: February was off to an even busier start.
That said, challenges remain: From inflation to uncertainty around tariffs and regulations, there are a lot of potential hurdles out there. Most things are out of your control, but you can fortify your company by focusing on the things you can control.
How do you move your business forward in this changing environment? Here are some guidelines based on what I'm seeing working with our tens of thousands of business clients:
Be more selective with funding
When markets were tight, businesses often had to take whatever financing they could find. Now, consider working with a partner that can provide solutions that fit an array of needs, like custom funding and faster approvals. Other options? A line of credit to draw on when you need it, or bridge capital to get you between projects. Do your research to figure out what's best for you based on your unique business needs.
You can't time the (interest rate) market
Interest rates are unpredictable — no matter what the gurus try to tell you. Here's what we know: The Fed recently decided to pause interest rate cuts but signaled it may cut rates later in 2025. Generally, as other costs like materials and labor rise, projects are more expensive than they were a year ago, even though interest rates have stayed roughly the same. In other words, those who have waited are paying more overall. If you're on the sidelines hoping rates drop, chances are you won't be able to get in the game.
The average interest rate paid by small businesses was 9.4% in January 2025, which is about the same as it's been for the last year. A slight majority of borrowers say they expect credit conditions to worsen over the next 3 months, while about one-fourth of companies are borrowing regularly, a rate that hasn't really budged in the last year. Last year at Fora, the average financing application grew 10% in terms of dollar value. All of this tells me the average entrepreneur is going by their schedule and not waiting to time the market.
Re-examine your company's financial needs
Maybe you've spent the last couple of years in "survival mode." When credit markets change, it's a good time to take stock of your needs and examine if the expansion you've been putting off might be worthwhile now. It also might make sense to refinance some of your debt. It's easy to lose the big picture when you're hyper-focused on the day-to-day: Sit down and do a full audit of your business to figure out what goals you have for the next 12 months and how best to reach them.
Don't panic about tariffs and federal policy
It's a hectic time, but keep in mind most changes need to be vetted by Congress and the courts and may not be implemented; while others may not affect you. We've already seen that trade wars can come and go quickly, and that Fed interest rate changes are unpredictable. Make a plan for how these changes could impact you in a most-extreme case scenario but don't let it dictate how you run your business. On the flip side, be aware that the administration has signaled its intention to cut red tape and make it easier on businesses; stay up-to-date on changes that could help you but wait until after they officially become law to take any action.
You can't fight inflation
But you can make a plan for it. Inflation continues to be the No. 1 concern among business owners (with 59% citing it as a primary factor in their business struggling). The recent surge in egg prices (which have nearly doubled) after bird flu concerns is proof of how unpredictable the market is. Keep in mind your competitors are dealing with the same issues and focus on the unique value you provide. A lot of businesses have raised prices to keep up, and that will continue to be the case — but there are other ways to cut costs to offset rising material prices. Conducting a line-by-line audit and trying to negotiate supplier deals are good places to start.
Can AI help?
If 2024 was the year AI went mainstream for consumers, 2025 could be the year it takes over businesses. A lot of AI programs are now available to automate simple tasks, find data patterns to drive sales, create marketing materials, improve customer support, create ads — the list grows by the day. My advice is to stay curious and be open to the technology, as it could help offset other cost increases. Technology can help you level the playing field with corporations that have bigger resources. That said, most tools still need to improve. Use it as a tool, similar to a computer — if you ignore AI completely or rely on it too heavily, you'll be in trouble, but if you embrace its advantages and use it appropriately, it can give you a leg up.
We're only scratching the surface here, of course. Curious to hear more? I'd be thrilled to talk with you more about the specific challenges facing your business, because each one is unique. You can send me a note at [email protected], or follow me on LinkedIn and X/Twitter.
Since 2008, Fora Financial has distributed $4 billion to 55,000 businesses. Click here or call (877) 419-3568 for more information on how Fora Financial's working capital solutions can help your business thrive.
